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1. The Effects of a Private-Sector-Driven Smallholder Support Programme on Productivity, Market Participation and Food and Nutrition Security: Evidence of a Nucleus-Outgrower Scheme from Zambia

Author:
Tekalign Gutu Sakketa, Raoul Herrmann, Chewe Nkonde, Mwelwa Lukonde, and Michael Brüntrup
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Nucleus-outgrower schemes (NOSs) are supposed to be a particularly effective private-sector mechanism to support smallholder farmers and contribute towards mitigating the problematic aspects of pure large-scale agricultural investments. This discussion paper uses panel household survey data collected in two rounds in Zambia to analyse some agro-ecological and socio-economic impacts of the outgrower programme of one of the largest agricultural investments in Zambia: Amatheon Agri Zambia (AAZ) Limited. The descriptive results show that the type of participation in the programme varies across participants and components, with most participating in trainings. Econometric results suggest the following key findings. First, although the overall impact of the AAZ outgrower programme on the uptake of conservation agriculture practices is robust and promising, impacts on the adoption of other agricultural technologies is less obvious and the effect depends on the type of support provided. Second, the programme has had a significant impact on maize productivity promoted in the initial phase but not on the other crops – mainly oilseeds – promoted later. Third, the initially less productive farmers seem to benefit slightly more than already better performing ones. Fourth, although the impact on overall household security was insignificant, there is some suggestive evidence (although the effect is weak) that the programme has a positive effect on improving women’s uptake of micronutrients. Finally, our findings show that the three components of the programme (trainings, seed loans and output purchases) have different effects on the adoption of sustainable agricultural practices and productivity, and to some extent on food security. Overall, the results suggest that NOSs, with all their risks, can play a role in the adoption of sustainable agricultural practices, improving farm-level agricultural technologies, providing input credit, and thereby improving productivity and smallholder livelihoods. However, this is not automatically the case, as it crucially depends on the design and management of the project; the availability of good policies and institutions governing the rules of operation; the types of crops promoted; the duration of the project; and the political commitment of host countries, among others.
Topic:
Markets, Food Security, Participation, Farming, and Productivity
Political Geography:
Africa and Zambia

2. Current Capabilities and Future Potential of African Textile & Apparel Value Chains: Focus on West Africa

Author:
Lindsay Whitfield
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Centre for Business and Development Studies (CBDS), Copenhagen Business School
Abstract:
African countries export very little of what is traded within apparel global supply chains and across the African continent, except in the case of cotton, but import a large amount of what the rest of the world produces. Africa’s fabric and apparel production is biased towards cotton, especially in yarn and fabric production, with little participation in production and export of man-made fibre, yarn and fabric. Most apparel exports from the continent come from North Africa, followed far behind by East and Southern Africa. Apparel exports from the African continent go largely to Europe and then North America. Currently, only 8% of Africa’s textile and apparel imports are supplied by other African suppliers. Southern Africa and especially South Africa is the largest supplier of intra-African imports of apparel. Inputs and intermediate textile products account for a significant share of intra-African textile and apparel imports in Southern, East and North Africa. Notably, under the free trade area in the Southern African Development Community, trade in clothes and home textiles increased, but trade in fibre, yarn and fabric did not significantly change. Overall, intra-African sources still account for a small share of these countries’ overall supplies of imported inputs, which indicates a substantial untapped potential. West Africa produces about 60% of Africa’s cotton but accounts for the bulk of its exports outside the continent, accounting for about 5% of the world cotton production and about 15% of world exportation. However, West African countries have little modern production capabilities in spinning, weaving, knitting or dyeing. A significant portion of the population in West Africa buys wax print cloth and has their clothes tailor made. The majority of the greige fabric used by the wax printing companies in Cote d’Ivoire and Ghana, which supply the rest of the sub-region, is imported from Asia. Only Ghana has industrial or mass apparel production for export, and it is small, comprised largely of two firms that started exporting in the late 2010s with foreign investment. Ghana and Cote d’Ivoire have some small-scale local firms producing for the domestic market, but most of these firms do not have the capabilities to grow into large firms that could produce using industrial methods. The governments of Togo, Cote d’Ivoire and Ghana are adopting new strategies to develop apparel exports in their countries. However, only the Togolese government has started implementing its strategy, which centres on an eco-industrial park and vertically integrated knit factories established through a public-private partnership with Arise Integrated Industrial Platform. Given the disruptions to globalized apparel supply chains during the Covid-19 pandemic and the resulting increased cost of shipping, buyers in the US and Europe are looking for shorter supply chains that are more resilient in the face of global shocks. Localization and regionalization of apparel production closer to end-markets are attractive to global apparel brands and retailers. However, global apparel buyers are no longer concerned just with cost, quality and speed to market when making sourcing decisions. They now must balance those criteria with sustainability goals. CBDS Working Paper 2022/3 5 Given the global trends outlined in this report that will reshape textile and apparel global supply chains over the next five to ten years, the textile and apparel industry should be reconceived as a sunrise and not a sunset industry. New fibre and recycling technologies are in a phase of fast innovation to produce more sustainable and circular man-made fibres. The raw material for clothing production will become manufactured fibres that rely on advancements in chemical technologies and biofabrication. Virgin cotton will be of less importance, as it is replaced by natural fibres that are less resource intensive and by manmade cellulosic fibres that feel like cotton. In the transition stage, cotton will move to organic and regenerative as well as become blended with other natural and man-made cellulosic fibres. Future fibres will have a high technology content and require licensing technology, both man-made cellulosic fibres and the new wave of synthetics that seek to replace polymers. African countries have the opportunity to build sustainable textile and apparel industries from the start, which can give them a competitive advantage as apparel-supplying countries in South and Southeast Asia do not (yet) have ‘green’ industries. The cost of renewable energy technology is falling and renewable energy technologies to power industries are evolving. New fibre and recycling technologies also offer a window of opportunity to leapfrog into the next generation of technologies. Taking advantage of this window of opportunity requires that the African government look forward and not backward, that they think in terms of building new and not rebuilding the existing textile industries. African textile and apparel domestic and regional value chains should be based on mastering the next generation of fibre production and recycling technologies. Such a strategy involves taking risks to invest in building the knowledge and skills required for this new technology, but not taking risks will mean that African countries miss the opportunity to move to the technological frontier. Furthermore, African countries can go beyond becoming competitive in the new textile and apparel global supply chains but also use them to drive broader green industrialization processes. Such a strategy also involves building diversified regional textile bases as well as regional value chains, which can harness the efforts of more economies and larger market demand as well as create a stronger platform of capabilities with which to engage in global export markets. AfCFTA negotiations on the rules of origin for the textile and apparel sector are on-going, and the AfCFA Council of Ministers responsible for trade is still working on reaching a consensus. The evidence assembled in this report shows that the textile production capabilities in the major apparel producing and exporting countries in Sub-Saharan Africa are not significant enough to support trade under a double transformation rule. Therefore, major investments in spinning, knitting, weaving, dyeing, and finishing are required before countries could take advantage of the preferential market access for textile and apparel in the AfCFTA with a double transformation rule. The quantitative and qualitative evidence presented in this report on the impact of the double transformation rule under SADC indicates that it did not encourage new investments in textile production, and thus regional integration was limited by existing textile production capabilities. CBDS Working Paper 2022/3 6 Trade rules are not strong enough incentives to encourage investments in textile production. In general, trade policy is a rather blunt instrument for addressing a task that requires a range of more sophisticated industrial policy tools. Instead of relying solely on trade policy tools, governments should design and develop industrial policies that actively support the learning processes of local firms. Part of the industrial policy tool kit to support local firm learning is attracting the ‘right kind of foreign direct investment’ and assisting local firms in leveraging technology from these foreign firms. Governments also need to make public investments in creating the industry-specific knowledge and skills for textile and apparel, which includes building the foundation for moving into new fiber and recycling technologies through investment in basic chemistry education and supporting partnerships in research between local and foreign firms and researchers.
Topic:
Markets, Business, Trade, Supply Chains, Value Chains, and Textile Industry
Political Geography:
Africa and West Africa

3. Financial disruption and fragile markets: A political-economic perspective on SMEs in the Somali private sector under COVID-19

Author:
Jos Meester, Johannes Claes, Claire Elder, and Guido Lanfranchi
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
This report explores SME growth and resilience in the fragile Somali context during the COVID-19 pandemic, including its relation to wider political-economic developments. The pandemic has demonstrated how Somali businesses have continued to be resilient and at times even thrive during crisis, but it has also exposed the sizeable vulnerability associated with the Somali territories’ trade, import dependence and financing system. The global COVID-19 pandemic has disrupted the supply and trans-shipment of goods. This has created shortages and price fluctuations for Somalia’s import-based economy and hampered the country’s payment system. It has also reduced remittances, buying power, access to finance and tax revenues. Shifts in funding streams have realigned political financing patterns and created price instability as political actors seek new ventures through which to move funds. Although the economic shock brought about by COVID-19 has not structurally changed the Somali political economy, it has exacerbated existing patterns of inequality. The contribution of the private sector to the COVID-19 response has likely supported a range of livelihoods throughout the Somali territories, yet the preferential access to governance and strong competitive position that allowed this also highlights a worrying level of inequality and market concentration, and raises questions regarding government legitimacy. It seems likely that the COVID-induced economic crisis has therefore reinforced rather than destabilised those dynamics that prevent small businesses from competing on an equal footing and fragile situations from developing and stabilising.
Topic:
Economics, Markets, Politics, COVID-19, and Fragile Markets
Political Geography:
Africa and Somalia

4. Korea’s Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions

Author:
Meeryung La
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As the US-China trade conflict intensifies, high dependence on US and China has been pointed out as a potential risk to the Korean economy. This calls for trade policies including diversification of trading partners and the establishment of a new model for trade agreements suitable to such diversified partners. Meanwhile, the necessity for such policies grows as protectionism spreads globally and trade order changes after the Covid-19 pandemic. Africa and the Pacific (AP) regions, the main areas of interest in this report, have been excluded from Korea’s FTA network despite their high growth potential and strategic significance. Most countries in the AP regions are geographically distant from Korea and mostly underdeveloped, so we have approached the region only in terms of development cooperation. Currently, trade agreements and systems for trade and investment with AP countries are insufficient, and the size of economic cooperation with these countries remains small. However, Africa has high market potential, owing to various factors such as its high population growth, middle-class growth, and transition to digital economy, while the Pacific island countries have abundant fisheries and marine resources, and wield voting power in international organizations. In this regard, it is necessary to build the foundation for cooperation with AP countries in the mid-to-long term. Against this backdrop, this study seeks mid- to long-term strategies to promote trade cooperation with AP countries. First we consider introducing and expanding nonreciprocal arrangements for developing countries in the AP regions, as currently provided to United Nations-defined least developed countries. Then we consider introducing a reciprocal trade agreement, for example, an FTA. As a result, we found that it is necessary to introduce an FTA model suitable for developing countries in the AP regions instead of introducing further nonreciprocal agreements. Based on the results of the study, this paper proposes strategic directions for trade cooperation with the AP regions, and furthermore, provides policy suggestions that should be included in the agreement with those countries.
Topic:
Markets, Treaties and Agreements, Partnerships, Digital Economy, Economy, and Trade
Political Geography:
Africa, Asia, South Korea, and Asia-Pacific

5. Levant Illicit Tobacco 2019

Author:
Oxford Economics
Publication Date:
03-2020
Content Type:
Commentary and Analysis
Institution:
Oxford Economics
Abstract:
This report provides an overview of the nature of illicit trade in cigarettes across three markets in the Levant region: Egypt, Jordan, and Lebanon. It establishes estimates of Illicit Consumption in each market and the impact it has on government tax revenue.
Topic:
Economics, Markets, Finance, and Illegal Trade
Political Geography:
Africa, Middle East, Lebanon, Egypt, and Jordan

6. Trade Update 2020: An Eye on Ammunition Transfers to Africa

Author:
Nicolas Florquin, Elodie Hainard, and Benjamin Jongleux
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Small Arms Survey
Abstract:
Even though states may not intentionally supply materiel to armed groups, a lack of stringent risk assessments on weapons and ammunition exports destined for areas prone to diversion can hamper efforts to curtail the broader illicit arms trade. The 2020 edition of the Small Arms Survey’s annual Trade Update, Trade Update 2020: An Eye on Ammunition Transfers to Africa, delves into cases of authorized small arms ammunition transfers to Africa through exploring the potential of beyond-the-norm data sources. Relying on peacekeeping operations, national customs, and civil society research, the case studies highlight ammunition imports from opaque exporters to countries affected by armed conflict, states subject to arms embargoes, and other areas on the continent equally prone to seeing arms and ammunition diverted from the licit to illicit markets. Ammunition accounted for 42 per cent of all authorized African small arms imports in 2017. Since countries with low transparency records do export ammunition to government forces in conflict-affected regions and such regions are prone to diversion, there is a gap in risk identification. Therefore, findings from the case studies emphasize the importance of exporters improving their reporting practices and carrying out stringent risk assessments. In addition, the leveraging of multiple data sources can enhance the monitoring of the authorized ammunition trade and help curb unauthorized activities.
Topic:
Civil Society, Crime, Markets, Peacekeeping, Arms Trade, and Transparency
Political Geography:
Africa

7. Financing Public Private Partnerships (PPPs) in Botswana Through The Capital Market

Author:
Kelesego Mmolainyane
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
In her quest to further graduate to the high-income status, Botswana seeks to invest more in infrastructure development for both productive and social use. An efficient and effective infrastructure provision is fundamental to excellent public service delivery and access. Sadly, Botswana, like many other world economies, has a challenge of having an infrastructure financing gap. One of the innovative ways to fill this gap is through public private partnerships (PPPs) with the capital market that has excess liquidity. Infrastructure PPPs are complex and capital intensive projects that require project finance experts to advise parties involved regarding returns and risks associated with each project. Various project-financing models can be designed to suit project specifications and they cannot be over-generalised for all PPP projects. Nevertheless, given the tight fiscal space, Botswana now, more than ever, should consider issuing PPP bonds and applying user changes model to finance economic PPP infrastructure for sustainable and inclusive economic growth.
Topic:
Markets, Infrastructure, Finance, Capital, and Public-Private Partnership
Political Geography:
Africa and Botswana

8. Towards 2022: Options for paying back Zambia's Eurobond Debt

Author:
Mbewe Kalikeka, Shebo Nalishebo, and Florence Banda-Muleya
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
On 20th September 2022, Zambia’s first Eurobond will mature. The Government will be required to settle its principal payment amounting to US$750 million in full. Twenty months later in April 2024, the Government will have to settle the second Eurobond worth US$1 billion. The third US$1.25 billion Eurobond will be paid back in three instalments in July of 2025, 2026 and 2027. With less than three years before the first Eurobond matures, there is no clear indication of how and where the money to pay back these Eurobonds is going to come from. This paper considers several options that will mitigate the possibility of a default when the principal payments on the Eurobonds are due. The lack of a payment strategy has made the bondholders jittery about whether they will get their money back. Bondholders have communicated their consternations by dumping the Zambian bonds which are perceived to be risky. With increasing yield rates on the three Eurobonds, of about 17% by end-September 2019, the market seems to have already priced in a default – only nations already in default, such as Venezuela, have yields as high as Zambia’s1. The yield rate is the barometer used to assess the risk inherent in the bond. In general, higher yields mean the bond has higher risk and corresponds to a decline in the value of the bond. There have been efforts made towards establishing a Eurobond Redemption Strategy, but its contents are yet to be publicised. Also, the failure to release the 2020-2022 Medium Term Expenditure Framework by September 2019, and the absence of the 2020-2022 Medium Term Debt Strategy to show a clear borrowing plan have added to the market apprehension. By just about every measure, the Zambian economic fundamentals are fragile. Growth is ailing, prompting the authorities to revise their growth projection targets from 4% to 2% in 2019. Agriculture has been in recession for several quarters now. The 2019 mining fiscal regime that has significantly raised the tax burden on mining companies to unsustainable and uncompetitive levels, coupled with reduced ore grades, has resulted in 8.4% reduction in mining value added in the second quarter of 2019. The electricity load management which commenced in mid-2019 continues to have adverse economy-wide effects. This has implications on revenue targets. Tax revenues in September 2019 were 17% lower than projected, a trend likely to continue at least up to the end of the year. Further, the recent weakness of the Kwacha is not helping either as it has increased the cost of external borrowing and debt servicing, making it prohibitively more expensive to service foreign-currency denominated loans, which include the Eurobonds.
Topic:
Debt, Economics, Markets, Public Debt, and Eurobonds
Political Geography:
Africa and Zambia

9. The Impact of Macroeconomic Variables on Capital Market Development in Botswana’s Economy

Author:
Koketso Molefhi
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
The study examines the impact of macroeconomic variables on stock and bond markets development in Botswana using Autoregressive Distributed Lag (ARDL)-Bounds Test. The results indicate that macroeconomic variables have an impact on capital market development in Botswana. In the short run, real output, money supply and inflation have a positive influence on the development of the stock market, while real exchange rate retards its development. Real output further supports the development of the stock market in the long run. For the bond market, only two variables, inflation rate and lending rate have positive and negative impact on the bond market in the long run respectively, while none of the variables influence the bond market in the short run. Policy implications include increased efforts by policy makers to increase money supply, gross domestic product for the development of stock market, while the bond market development requires a decrease in lending rates.
Topic:
Economics, Markets, Capital Flows, Macroeconomics, and Economic Development
Political Geography:
Africa and Botswana

10. Globalization and Its ‘Born Throwaways’: Exploring the Impact of Neo-Liberal Reforms on Irregular Migration in Africa

Author:
Elias Chukwuemeka Ngwu, Anthony Chinedu Ugwu, and Emeka Charles Iloh
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
African Heritage Institution (AfriHeritage)
Abstract:
Policies of free trade and the adoption of neoliberal economic models, which are important aspects of globalization, have caused major disruptions in labor markets around the world. In the less developed regions of the world, relatively unskilled agricultural hands have been rendered redundant in production processes while in the more technologically advanced countries, several long-stable industries closed down while some others were outsourced to less developed countries in a bid to maintain competitiveness. As the flow of material and cultural goods and services accelerated over time under the rubrics of globalization, human beings dislodged from their various productive bases became important components of the exchange. However, whereas the process of globalization appears to be bringing humanity closer together due to advances in transportation and communication technologies, this apparent physical closeness has created social distance between individuals and groups across territorial boundaries. Large numbers of mostly economic migrants from the less developed regions have ossified into an army of social outcasts, born throwaways, in various destination and transit countries. This paper explored the contradictions and tensions arising from globalization-induced migration within and out of Africa. It found that the massive outflow of irregular migrants from Africa has fed into the stream of modern day slavery in transit and destination countries that is unlikely to abate even in the face of apparent repudiation of globalization by its avid promoters, the United States and Great Britain.
Topic:
Development, Globalization, Markets, Migration, Neoliberalism, and Economic Development
Political Geography:
Britain, Africa, and United States