Items filtered by date: Saturday, 13 May 2017

Zambia's smallholder farmers could be made squatters on their own land as the country opens up to farming multinationals in an effort to boost its economy, said a United Nations expert.

Hilal Elver, U.N. Special Rapporteur on the right to food, said Zambia's ambition to develop its commercial farming sector to become "Southern Africa's food basket" risks worsening extreme rural poverty, as farmers face eviction to make way.

Elver said she was alarmed that 40 percent of Zambian under fives have stunted growth due to malnutrition, despite the country emerging from crisis to "impressive" levels of economic growth.

Zambia's economy has been depressed for years by low commodity prices, mine closures, rising unemployment, power shortages and soaring food prices but the World Bank predicts 4 percent growth this year.

"It is vital that development plans and policies take into account the true cost of industrial farming methods... as well as the social and economic impact on people, rather than focusing only on short term profitability and economic growth," Elver said in a statement.

Sixty percent of Zambians are small-scale farmers, who make up many of the nation's poorest people but produce 85 percent of its food, according to the U.N.

Elver said agricultural growth in Zambia over the last decade had focused on large businesses, leaving peasant farmers behind.

Around 85 percent of land is held under customary tenure, mostly in the hands of peasant farmers, with little legal protection from eviction, she said at the end of her first official visit to the country.

After eviction, many peasant farmers are forced to work in poor conditions on large industrial farms or are obliged to sell their crops at knock-down prices for export by monopoly-type multinationals who buy produce for export, she said.

Intensive commercial farming has also led to increased use of agro chemicals proven to damage children's health and boosted rates of deforestation and environmental damage, she added.

(Reporting by Matthew Ponsford, Editing by Ros Russell.; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org)

Published in Agriculture

From mobile money to cargo drones and rugged portable wifi hotspots, Africa’s innovators are generating new technology to tackle consumer needs and development challenges.

New data charting investment activity flowing into Africa’s tech start-ups shows that international investors are taking notice. According to Disrupt Africa, a portal for start-ups and accelerators across the region, tech start-ups on the continent raised more than $129m in 2016.

Overall, 146 start-ups raised investment, a 16.8 per cent rise in the number of funding rounds compared to 2015. 

Financial inclusion remains a challenge across Africa, where only a third of adults have access to any kind of basic financial services, according to the IMF. It makes sense, then, that financial technology – or “fintech” – innovations attracted the most start-up funding in 2016.

According to the research, fintech start-ups raised a combined total of more than $31m, or 24 per cent of all the fundraising recorded in the course of the year.

According to Tom Jackson, Disrupt Africa’s co-founder, fintech appeals to investors because it checks two boxes. “Investing in fintech start-ups offers investors serious potential returns, given the size of the untapped markets these companies can reach,” he explains.

“There is also a strong impact angle in that new forms of financial service provision have the ability to empower and connect unserved Africans.”

The potential impact of new health and agriculture technology is talked about a lot, but that has not always been reflected in the amount of funding backing innovators in these areas.

However, in 2016 both sectors saw strong growth. E-health start-ups represented 7.5 percent of companies to raise funding over the year, ranking as the sector third in terms of the number of funding rounds counted.

Meanwhile the agri-tech space saw incredible growth of 8,660 percent in the amount of funding received, as compared to 2015.

These start-ups are tackling a range of issues with equally diverse approaches. “Solutions range from e-health companies providing diagnostic solutions using smartphone apps, to agri-tech firms connecting farmers with lucrative new markets using the web and SMS,” Mr Jackson says.

In terms of location, South Africa – famed for the “Silicon Cape” tech scene centred in Cape Town – was the most popular investment destination in 2016, with 64 of its start-ups taking home more than $46m.

This reflects the booming support network for start-ups across the countries’ urban tech scene, with numerous organisations offering everything from funded acceleration, to niche mentorship, to access to cutting-edge facilities.

A number of global entities – such as Barclays, GE, and Thomson Reuters – also launched start-up-oriented activities in South Africa during 2016.

Nigeria and Kenya – or the “Silicon Savannah” – rounded out the top three. Combined, these countries accounted for 80.3 per cent of funds secured. Egypt, meanwhile experienced more than 100 per cent growth in fundraising, coming in fourth.

Clearly investors are tapping into Africa’s tech prospects, and looking more broadly at the opportunities on offer. – ThisisAfrica 

Published in Opinion & Analysis

A downgrade of the South African rand's credit rating and sagging business confidence are the biggest risks to growth this year, a Reuters poll found, and would make it difficult for the economy to escape a slow-expansion trap.

Both Standard & Poor's and Fitch Ratings Agency downgraded South Africa's credit rating to below investment grade last month, citing likely changes in economic policy after Finance Minister Pravin Gordhan was fired, shaking confidence.

Some economists say the bar is not high for a currency rating downgrade this year but it remains a significant risk.

Christopher Shiells, an emerging market analyst at Informa Global Markets in London, said a downgrade would impact GDP growth and put upward pressure on South Africa's cost of capital, further dampening investment.

"Businesses may now choose to withhold investment decisions that would otherwise have supported economic growth," added Shiells.

According to the poll of twenty six economists, taken this week, growth will remain subdued at 0.9 percent this year, trimmed from 1.0 percent in the previous poll. Next year it is expected to expand 1.3 percent, slower than last month's 1.5 percent forecast.

The business confidence index in South Africa edged up last month, however it is still very low by historical standards.

"Without a lift in business confidence, private sector fixed investment, which has already contracted for five straight quarters is unlikely to recover much, further undermining the creation of desperately needed jobs," said Miyelani Maluleke, economist at Absa Capital.

Fixed investment is normally capital spending, such as buying new machinery for future production.

"We still say the answer is private-public partnerships, where government identifies the projects, but gets the private sector more involved and therefore it does not have to fund that itself initially," said Kevin Lings, economist at Stanlib.

"It can use private sector balance sheets to fund all of this, but there does not seem to be any initiative," he added.

Lings said the risk is that private business will increasingly look elsewhere to see if there are investment opportunities.

Johannesburg's Top 40 index of blue chip companies currently sits comfortably at a price-to-earnings ratio of 20.58, with companies wary of investing locally but looking more into the continent and further abroad for safer bets.

REFORMS NEEDED

Economists said the top reforms needed to lift confidence and harness inclusive growth were predictable and consistent policies for business and an easing of labour regulations in Africa's most industrialized economy.

Over a quarter of the labour force is unemployed and the World Bank noted South Africa remains a dual economy with one of the highest inequality rates in the world.

Still, Finance Minister Malusi Gigaba has sought to allay investor fears over his pledge of "radical economic transformation", toning down the rhetoric just over a month into the job, to talk more of "inclusive growth".

Economists mostly said they do not understand what "radical economic transformation" means for South Africa and hope to get more clarification in coming weeks when the African National Congress holds its policy conference.

The outlook for interest rates has not changed, the Reserve Bank is expected keep rates stable at 7 percent until at least 2020.

By Vuyani Ndaba - (Reuters)

Published in Economy

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