Items filtered by date: Friday, 22 September 2017
Friday, 22 September 2017 07:37

How to help farmers prepare for climate change

Floods as well as droughts and heatwaves are increasing and will continue to do so in Africa and South Asia. Farmers and governments need to adapt to this changing climate regime. But adaptation requires decisions to be made under high uncertainty, often with incomplete knowledge. This makes planning and investing in it difficult.

There is an increasing demand for short-term climate information like weather advisories. They are used most commonly to help people decide when to sow or irrigate their crops. For their part, seasonal forecasts are used for decision making by governments and NGOs, and by some farmers. But long-term information, going from seasonal forecasts to decadal climate projections, isn’t being used for planning. This includes anticipating and preventing disasters.

There is increasing evidence from across many African and South Asian countries that contextual, timely climate information, helps farmers manage the risks they face. This is particularly true when its integrated with other information such as disease outbreaks or market prices and demand. The information can guide decisions on which crops to grow, when to plant them, what seeds to use, how to market the produce, and how to divide resources between farming and other livelihoods.

But there’s less demand for long-term climate information. This is primarily because it tends to be highly uncertain and the scale of long-term climate projections tends to be too coarse. Also, policymakers find it difficult to justify investment and action based on what might happen far into the future. And there is typically a lack of institutional capacity to deal with long-term climate risks.

Other barriers to the use of climate information include: mismatches between personal or traditional beliefs and what climate information suggests, the availability of useful information at the right time, how it’s communicated and to whom, and inadequate capacity to interpret provided information.

To overcome these problems, climate information providers must develop services tailored for different needs. This requires local, national, regional and international institutions to work together. They must also work closely with vulnerable communities so that relevant climate information can be co-developed.

Notable exceptions

A number of initiatives in India and Africa illustrate the ingredients needed for the successful uptake and use of climate information. The Adaptation Learning Programme in Ghana, Niger and Kenya integrates national meteorological information with local rain data and traditional forecast knowledge. And in India, the Watershed Organisation Trust’s innovative advisories are crop specific and include nutrient, water, pest and disease management recommendations.

What makes these initiatives successful is that they:

For long term climate information to be used decision makers need to trust and understand the information. In addition, it must be tailored to the local context, fit for purpose and available in time. There must also be relevant governance and institutional structures in place and an emphasis on the socio-economic value in subsequent decision making.

Benefits of short-term actions

Short-term actions that farmers take to cope with weather can help them adapt to long-term change. When people see progress, they learn how to plan. They may change their behaviour, restructure their systems and learn from extreme events like hurricane Harvey.

  1. Behavioural shifts: For example, in Western Kenya, at the start of each rainfall season, seasonal forecast information is jointly produced by the Kenya Meteorological Services, sector experts and indigenous knowledge forecasters to help communities plan for rainfall extremes. Climate projections that demonstrate a warming trend can motivate people to start growing temperature tolerant crop varieties.

  2. Restructuring the system: For example, in India, national investments in the mid-2000s helped develop a robust system of climate information services. The system produced forecasts, trained extension staff and held field demonstrations through regional agriculture universities. These investments slowly recognised the importance of climate information to manage risk. Forecasts are improving and the private sector sees the value it gets from investing in climate information delivery. Climate information is increasingly being used in adaptation initiatives.

  3. Sudden change: high impact extreme events like Hurricane Harvey or flooding in Mumbai can motivate swift action to set up infrastructure, increase investment and build capacity. Once in place, these initiatives can lead to longer term change. For example, in India, the super cyclone in Odisha in 1999, which killed almost 10,000 people, led to better early warning systems. It changed the way people thought and behaved. When cyclone Phailin hit the Odisha coast in 2016, the death toll was drastically reduced to 45 people, with lower losses to property.

As climate continues to change there is an increasing need for long-term information to be incorporated into decision making. When this information is tailored to local contexts it can help people adapt.

 

Dian Spear, Southern Africa lead, Adaptation at Scale in Semi-Arid Regions, University of Cape Town and Chandni Singh, Research Consultant, Indian Institute for Human Settlements (IIHS)

This article was originally published on The Conversation. Read the original article.

Published in Agriculture

Fool me once, shame on you, fool me twice, shame on me. So, what’s my point here? The point is we can’t be conned twice the same way in 10 years and blame the conmen. It won’t be amnesia but sheer idiocy.

Look around! Does everything that’s happening in Zimbabwe look familiar? It should because it’s happening all over again. If you have not realized, the very loud signs of the pre-2008 period are illuminating so brightly in the dark, and we really have to be blind not to see them. It’s happening all over again, the bank queues, cash shortages, some filling station queues, some goods fading out of the shelves in the supermarkets, a rampant parallel market and so forth. The tale-tell signs are all over the place. The frightening part is that it’s happening at a time when we don’t even have our own currency.

Ignore the clutter as well as sideshows and dig deeper, you start seeing the frightening reality. Let’s look at a typical example: Econet Wireless Limited, a Zimbabwe Stock Exchange (ZSE) listed company declared a 0.386 cents dividend per share amounting to $10 million for the first quarter ended 31 May 2017. To my knowledge, this is the first time the company has declared a quarterly dividend since the death of the Zimbabwe dollar. The question is – how does this listed company, which was clamoring for tariff increases just a few months ago afford such a quarterly dividend? Add to that the reality that quarterly dividends are very rare in Zimbabwe.

If you peel the veil and even dig deeper, you will discover that early last year, Econet Wireless Zimbabwe collected daily revenues of around $2 million dollars a day. Today, the figure has grown three to five-fold to between $6 million to $9 million a day. How is this possible when in January, it earned the wrath of Zimbabweans after it tried to effect a tariff increase? Miracle money? The answer is partly yes. Its miracle money because the government has been creating money from thin air at a time the economy is declining. I will come back to that later.

The Econet scenario is found across all mobile networks. This is because when the cash shortage started, smart dealers quickly realized that the most enduring cash source was the airtime business. As such, they would transfer an RTGS balance to a mobile operator, get airtime, sell it at cost on the street for cash, flog that cash on the parallel market, make massive returns and repeat the cycle. This is how some airtime vendors are able to sell airtime at less than it’s face value. Clever, isn’t it? It’s an arbitrage opportunity created by clueless policy makers and fortune seekers jump on it. Mobile operators have found themselves with massive liquid bank balances. Since they can’t pay foreign suppliers with it, what better way to use it than reward their local shareholders!

Recently, a friend reminded me of how we used to apply the Old Mutual Implied Rate during the hyperinflation era. It is basically based on purchasing power parity – the same way the Big Mac Index published by The Economist does. If you don’t know, here is how it works. Old Mutual is listed on the ZSE, Johannesburg Stock Exchange and London Stock Exchange (LSE). The shares are fungible and should theoretically have the same price. As of now, the price of Old Mutual shares on the LSE is £1.96 (or $2.64) per share. That would be the theoretical price of the same shares in Zimbabwe. However, the current price for Old Mutual shares on the ZSE is $7.72.

So instead of trading for around $2.64, the fungible shares are available in Zimbabwe at 292% more. In other words, you pay almost three times more for Old Mutual Shares in Zimbabwe than you would in the UK. What does that tell you? It simply means the currency we use in Zimbabwe, whatever we call it is no longer the US dollar (USD). That local unit has depreciated three times against the real USD. This helps to explain why the revenues for Econet in my example about have gone up threefold. To explain this using two sides of the same coin, the heads is inflation and the tails is currency depreciation.

The above examples simply show that what we call a dollar in Zimbabwe are not equivalent to the real USD. The USD on the parallel market is currently trading at a 50 percent premium. Put differently, our local unit is 50% less valuable than the real USD. If you compare this rate and the fundamentals I have shown above, it’s clear the worst is yet to happen and the local unit will be getting severe battering. You can see this everywhere, from the massive rally on the ZSE not supported by any improvement in business to price increases taking place in the supermarkets.

So, what really happened? On one hand there is a temptation by laymen to bash bond-notes. On the other, naïve folks in our midst gullibly thought bond notes would solve the cash problem. It’s understandable, but when they were introduced, bond notes were an aspirin to a body afflicted by a dangerous virus. Mangudya was trying a wrong solution to a wrong problem after a wrong diagnosis. Part of the problem is that besides Mangudya and the deputy governors, the rest of the team at the Reserve Bank of Zimbabwe is essentially the same team Gono had.

Why are we back where we were ten years ago? How did we fall in the same ugly pit one more time? Why did we not have cash problems from 2009-2013? Why did the cash problem start from the time Zanu PF took sole control of government? The answers must be pretty obvious from the way I have framed my questions. Simply put: left to its own devices, ZANU PF started creating money with reckless abandon.

To reflect on this let us take a step back. Remember in 2009, all civil servants were paid $100. In fact, due to hard currency shortages, they were paid using vouchers which they redeemed at banks. That was a sign that USD reserves were thin. At that time, civil servants were estimated at 130 000. Over the years, both the number of civil servants and their salaries have increased in multiples. For example, President Mugabe earned $1750 in 2010. He revealed in April 2014 that his salary had increased to $4000 per month, a more than 200% increase. In 2015, he complained that his new salary of $12000 was too little. At that point it had increased by 685%.

We also know that Minister Patrick Chinamasa budgeted for a salary increase for the President and his deputies in February 2017. At this point you should be getting the gist of my argument. Between 2010 and 2015, Zimbabwe economic growth averaged no more than 5% per year. That’s significantly far less than the growth in multiples of salaries of politicians and civil servants. Apply the same math to the private sector and you get a terrible picture. Since Zimbabwe only earns United States dollars from exporting goods and services as well as foreign direct investment and other minor inflows, apply the same math to the growth in earnings by locals vis-à-vis growth in exports and you discover a shockingly gloomy picture.

During the government of national unity, Tendai Biti used to rein in expenditure and take a more austere approach to balance the budget. This restricted the local creation of money – keeping it in close tandem with exports. Still the country had a negative balance of trade and a current account deficit, but it was manageable. Once ZANU PF took sole control of government all gates were opened. The government went on an expenditure spree, buying luxury cars, flying to every meeting they could and awarding salary increases among other things. They think money grows on trees. Even though Chinamasa was faced with the reality given that numbers don’t lie, President Mugabe kept telling him to find the money.

For example, flanked by Jonathan Moyo and George Charamba at a press conference on 13 April 2015 at Munhumutapa Building, Chinamasa announced that the government was suspending the payment of bonuses. This of course was informed by the reality of the situation. A few days later, Mugabe publicly trashed Chinamasa at an Independence Day celebration. Naive civil servants celebrated Mugabe’s move, but they didn’t realise that such a move would invite the current problems.

Rampant spending of money took place in 2014. From that time, Chinamasa started running large budget deficits. Government was funding the reckless spending by creating money. How did they do so? They created IOUs, borrowing extensively in the local market through instruments like treasury bills, assuming old debts such as the $1 billion RBZ debt, and downright creation of digital balances wired via the RTGS system. This was just on the part of government – meanwhile banks were also creating money through lending (Note: assumption is that the reader understands how banks create money). All this money created locally could not match the real United States dollars generated through the exports of goods and services. From this basis alone and from that point on, the country was no longer using proper United States dollars.

The symptoms started showing in March 2014 when the government failed to pay its workers on time. It was the start of serial shifting of pay dates which has gotten chronic over the years. In the first quarter of 2015, the Government failed to remit civil servants deductions for payments like medical aid. It was at that point that Chinamasa announced the scrapping of bonuses which Mugabe promptly reversed. The worse the problem became, the more government created money through borrowing, worsening the economic challenge and creating a vicious cycle.

As things got worse, citizens became disenchanted, and by July 2016 when the “This Flag” movement called for a successful shutdown, the government had its back to the wall, especially after civil servants heeded the stayaway. From that time on, more local money was created to take care of this problem. The consequence was that the cash shortage that had started in December 2015 became more pronounced as created local balances could not match actual United States dollars created through exports, foreign direct investment, diaspora remittances and other avenues.

That Zimbabwe is still using the United States Dollar as currency is pure fiction. Zimbabwe abandoned the USD as currency way back in 2013 after the elections. The government did it nicodemously when we all weren’t looking. This was partly driven by greed, partly by ZANU PF’s cluelessness and partly by the party’s perpetual electoral mode – it campaigns more than it governs.

What does this all mean? It simply means that we are back on the same road as we were from 2006 to 2008. The ghosts of shortages and inflation are creeping in. For the first time, the state-controlled Herald admitted as much about this headache. All Mangudya and his principals can do is just patch holes and react the same way Gono did, albeit with less subterfuge. That my friends, is what we are facing. There is no point in sugarcoating reality because there is no Sugarcandy Mountain anywhere near.

Robert Mugabe is the only President with the unique distinction of battering two different currencies in his lifetime and within a space of fifteen years. He did not just ruin the Zimbabwe dollar, but also tore apart the United States dollar as we knew it 2009 to 2013. So what needs to be done? It is beyond the scope of this article. But we must deal with the fundamentals.

We have to make Zimbabwe attract national and international capital, re-kit our industries and produce for export, reopen redeemable parastatals and close the irredeemable ones, trim the public service, invest in infrastructure and transform our work ethic completely for the better. The present government has proven, not once, but twice that they are clueless and cannot address the fundamentals. In its current configuration, the government will never change our trajectory. Serious inflation is coming and so are all the problems we have experienced before.

 

The author is a former banker and a current equity investor in small start-up companies in Zimbabwe, Botswana, Zambia and South Africa. He holds a business postgraduate qualification from an Ivy League university in the USA, where he carried out research on code driven versus regulated corporate governance issues in the late 90s. He can be contacted on This email address is being protected from spambots. You need JavaScript enabled to view it.

Published in Opinion & Analysis

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