Impact of rural investments on livelihoods (Mozambique, Zambia and Zimbabwe) (Published-2013)

1.0 Introduction

The increase in rural investments deals in the region provides a stark snapshot of how agribusiness and extractive industries have been rapidly expanding across the globe since the food and financial crises of 2008 and how this is taking food production out of the hands of farmers and local communities. Although it has been confirmed that Africa is the primary target of rural investments, it also underlines the importance of Latin America, Asia and Eastern Europe, demonstrating that this is a global phenomenon1.
The selected economic sectors for rural investments are tourism (including wildlife management), extractive mining, export food crop and bio-fuel production. The nature and dynamics of land grabbing is reflected by the number of land leases that have been issued since 2008 for agriculture and mining purposes. The major drivers of land grabbing have been oil and gas as well as other mineral discoveries, pension funds investments from the North and food security concerns of emerging economies. Land grabbing worldwide has become an incontestable reality and a significant threat to the livelihoods of small-scale farmers particularly in Africa. The rural investments often referred to as “land grabbing” are commercialising agriculture when 80% of the population is rural in southern Africa. The attempts to commercialise include contract farming, switch to high value commercial crops from food crops, consumption of imported food instead of the traditional foods and changes from natural forests to reserved land for tourism and private estates for the production of crops used for fuel production and demarcation of land for extractive mining.
The agricultural model used is technicist such as introducing high yielding varieties, privatisation and commercialisation and promotion of exports. The denial of land to smallholders through displacement of communities is creating a serious food insecurity problem.

2.0 Dynamics of land grabs

When entering such agreements, the host states expectations are creation of jobs, diversification of economy from the traditional dependency on the export of a few primary commodities (whose global prices are volatile), technology transfer, increase in fiscal revenues, wealth creation and commercialisation of agriculture. Thus the foreign direct investments (FDI) are seen as a blessing by most African governments. On the other hand, FDIs seek maximum returns from investment venture, protection from expropriation by the host state, freedom to repatriate profits in the form of dividends, debt service payment, recapitalisation and international arbitration in case of disputes with host state.
Owing to their desperation for investments, African governments provide an additional incentive in the form of investment packages. Investment incentives take the form of tax holidays, exemptions on export and import duties, subsidized infrastructures, and limits on workers’ rights. Empirically, incentives restrict host governments from regulating foreign investment and result in loss of policy space. Furthermore, the domestic institutions of host states are too weak to control and regulate the operations of foreign investments.

A small powerful domestic elite class that benefits from the new trends in investments has emerged. This class has influenced the state to create a neo-liberal legal-political framework for land grabbing over the past decade. Land has been commoditised and indigenous rights suppressed. Ideologically, the elite class harbours the notion that the land is vacant, idle or underutilised, therefore can be leased for more productive use through foreign direct investment. The elite class enjoys state power and is instrumental in facilitating land deals with foreign capital and is ideologically geared towards large-scale farming and extractive mining.

3.0 Global Institutional Support to Rural Investments

Although international agencies, such as The World Bank (WB), United Nations Food and Agricultural Organisation (FAO) and Conference on Trade and Development (UNCTAD) are genuinely concerned about the negative consequences of large-scale land acquisitions, they are not in principle against it. However, they prefer to have them regulated due to their ideological belief that foreign direct investments in rural areas leads to economic growth which trickles down to the benefit of the majority2. Therefore they view their central role as creating rules and regulations to guide foreign rural investments. According to some commentators, these global institutions want to shield themselves from criticism and provide some kind of road map for responsible farmland investment practises. The whole exercise is meant to accommodate land grabbing and turn it into something more acceptable through policy frameworks, regulations and guidelines3.
Thus when land grab became a clear trend in 2008-2009, the WB conceived an ambitious programme to facilitate their acceptance as a legitimate business practice. WB initiative has seven principles that determine what should be acceptable as legitimate responsible farmland investments. Those seven principles for “responsible agricultural investments” (RAI) were supported institutionally by FAO, UNCTAD and the International Fund for Agricultural Development (IFAD), while at the same time rejected by small farmers organisations worldwide. Those large scale projects that satisfy the criteria qualify as responsible agricultural investments (RAI) and become acceptable to the WB.
In turn the Bank underwrites (guarantees) rural investment projects against political risk of changes in government through a unique agreement where investors pay a premium to the bank to validate the investments against expropriations. The insurance not only covers risk against expropriation, but also civil disturbance and inability to use those assets. FAO observed the trend as early as 2008, and made some statements about neo-colonialism, but as a sensitive issue since some of the FAO funders were involved4, it was forced to toe the line and adopt a laissez faire attitude.

4.0 Private sector participation

The private sector provides the largest capital flow into rural investments. Without strong public policy interventions to contain and regulate it, the sector is moving ahead to serve its own regulatory needs, without public oversight. It then practices voluntary self-regulation.

The major component is corporate social responsibility (CSR) that is doing everything that they can to convince themselves, regulators, local authorities and the public that their operations are above board and do no evil to communities.

5.0 Consequences of rural investments 5.1 Land grabbing violates the right to food, trade &natural resources

(discovery of minerals & land reform) for smallholder farmers to the benefit of FDI’s insatiable appetite for profit. Customary landholding patterns are insecure. Rural investments have led to commoditisation of land and deprivation of rights. They are central to ethnic clashes and violence taking place in East Africa particularly Kenya while the big players continue to use the idle land ideology. (Scramble for land AIAS workshop, Jan 2013).

5.2 Within the vicinity of large estates, contract schemes have been established transforming production from subsistence to commercial purposes under conditions of extreme insecurity due to the volatility of world prices. In turn the change in cropping pattern has led to change in diets from consuming indigenous to western foods. It has also induced a change from natural forests to bio-fuel production and tourism.

5.3 There are environmental concerns when it comes to extractive mining. It changes the whole local ecosystem to the detriment of the original livelihoods of the inhabitants. Chemicals used in extractive mining pollute river systems and air with toxic substances resulting in the death of livestock and contraction of diseases by human beings and siltation of dams.

5.4 The struggles for land are localised (usually organised on ethnic grounds), and there is a need to capture policy space at the national level in order to offer effective resistance. NGOs claim to represent the grassroots but the nature of the resistance shows otherwise as their actions are independent of what NGOs expect.

6.0 Case studies

Three cases of rural investments have been selected to illustrate the impact of rural investments in southern Africa. These are Tete coal-mining in Mozambique, Market-based land reform in Zambia and Chisumbanje Ethanol project in Zimbabwe.

6.1 Tete Coal Mining (Mozambique)

6.1.1 Background
After the peace agreement of 1991, marking the end of the civil war, Mozambique embarked on a bold programme of macro-economic reforms and structural adjustment with the advice of IMF/WB to rehabilitate the economy ravaged by 15 years of civil war. The reforms included rural land where 3.2 million smallholder families reside.
The reforms created a liberal investment regime (one with less government control), a lucrative climate for foreign direct investments with the discoveries of coal and gas reserves in the last decade. In recent years, companies including Vale, of Brazil, and Rio Tinto, of Australia, have made multi-billion-dollar investments in developing Mozambique's rich coal reserves in north-western Tete province. The mines are concentrated around the small town

of Moatize (this is the town where the subcontractors have their offices, factories and accommodation). Mining concessions and exploration licences have already been granted covering a third of the area of the province, with pending licenses covering another third. Coal mining began in 2011, though some companies such as Vale had already established themselves by 2004. Vale (based in Rio de Janeiro) and Rio Tinto (based in London) have invested nearly $10 billion in mines in Tete, home to an estimated 23 billion tonnes of coal, some of the world's biggest untapped reserves.
Coal exports have helped create an economic boom in one of the world's poorest countries. The opening up of new coal mines displaced farming communities which have been resettled on arid lands inducing food shortages5.

6.1.2 Community grievances
The affected communities have expressed dissatisfaction with the new developments brought about by extractive copper mining to their livelihoods. Previous expectations of reaping benefits from coalmining have not materialised and they find themselves worse off than they were before the new investments. Displacement without adequate compensation
According to a Human Rights Watch report quoted in a BBC bulletin, 1,429 previously largely self-sufficient households have been moved, but now face "serious disruption in their access to food, water and work"6. Vale has resettled more than 1,300 households to make room for its Moatize Coal mine in Tete and Rio Tinto has resettled 84 households at its nearby Benga mine and is due to resettle 500 more next year7.
Although there are more banks, shops, restaurants and hotels than before the boom, the companies still have a long way to go to convince the communities of Tete and Moatize on the benefits of coal mining that necessitated their displacement and resettlement in less favourable localities. For the population still living on smallholdings or minimum wages, this is not the kind of benefits they were hoping for. They are also living with the less visible side effects of the development emerging from the establishment of coal mines; rising criminality and increased prices for food and housing. Loss of livelihoods and protests
With such a large proportion of land earmarked for mining, there is little good farmland left to resettle the families on, and many now live on land "far from rivers, public services and markets"8 since being moved between 2009 and 20119. More than half the booming northern Tete province has been zoned for mining, limiting the amount of good farming land available for resettlement. Residents of the Cateme resettled community periodically block roads - most recently in April - to protest against crumbling houses and lost livelihoods. 500 residents of Cateme, one of Vale's resettlement villages, took to the streets when cracks opened in their company-built houses only months after they moved in, crops failed and jobs at the mines dried up10. In May 2013, the main rail route from the Tete coal fields to the Indian Ocean port of Beira was blocked by bricklayers protesting terms of their relocation.
The government is at fault for failing to provide adequate oversight and channels of complaints to the affected communities. Consequently, resettled families and others affected by the mines took to the streets to protest against their treatment and broken promises by mining companies. Lack of job opportunities
The companies have been accused of failing to create enough jobs for the affected families. There are also rumblings on the streets about the lack of jobs for locals, using workers from elsewhere and abroad as well as not buying locally grown produce. The few that have been employed are either guards or chauffeurs, menial jobs while the better paying jobs are reserved for those coming from abroad and other parts of the country.
In response Vale claimed that it has been recruiting as much as it could locally, but there is a scarcity of technical skills within the community. "It's difficult to find the skills we need here. The jobs are highly technical and there is no technical institute here. We compete with coalmines in Australia and Canada. We don't get a higher price for the coal because it's extracted in Africa. It's easy to blame the companies but the problems were here before." Vale says it employs nearly 400 workers from Tete province - out of a 1,400 strong workforce - and are recruiting 300 others for training, a third of whom are earmarked for jobs in a new mine opening next year11. During the year 2013, more than 6,000 people applied for just 150 internship positions12
Local government officials admitted that they have been slow to response to the mining boom and the need for skilled labour. They are planning to set up a new technical school in future, a rather belated move in the prevailing circumstances. Reliance on processed food
The establishment of the mines were expected to create a market for agricultural produce from the province which it is ready to supply. The provincial governor became concerned that the new companies were importing pre-packaged food and not buying locally. The companies want pre-packaged foodstuffs, services that are not available in Tete. Although there is the need to develop a local food processing industry, nothing has been done yet.

Moreover, food has become more expensive than it was before. A community leader commented, "Look at the roads, still full of potholes," he laments. "Not much has been done in the schools [either]. Everything has just become much more expensive. Nothing has really changed here for the better."13
However, in this regard Vale has a plan of setting up a small food processing industry in Cateme, where the majority of the resettled populations live. This could create employment where it is badly needed and reduce community criticism.

6.1.3 Response to resettlement controversy
Both the government and mining companies have taken steps to ameliorate the impact of the mines after the publication of the Human Rights Watch (HRW), though more needs to be done to ensure descent lives for the resettled farmers. Vale commended HRW over the issues it had uncovered. It claimed that it had taken steps to compensate families fairly, ensure they did not go hungry, improve their housing conditions and improve irrigation and farming yields14. While admitting to the mistakes made, the Tete province governor claimed that the government had engaged the mining companies to rectify these mistakes and had implemented new resettlement regulations.
However, in light of the above, the latest development concerns an Indian company, Jindal that opened its coal mine in August 2013. It was inaugurated amid much fanfare by the Mozambican President. It is the third-biggest coal mine in a country where annual economic growth rate is 7% spurred by revenue from coal mining. Jindal, a steel maker, is expecting to export 10-million tonnes of coal annually, taking advantage of industrial development in India and China.
It has also become embroiled in conflict with local communities. Mounting anger at the company’s failure to relocate 2,500 nearby residents boiled over into conflict. Irate subsistence farmers attacked four Jindal employees, according to local environmental group Justica Ambiental (JA)15. It failed to resettle these locals in time as it is already the sowing period threatening their food security situation. The head of Jindal Mozambique put the blame on the government for the delay which he claimed had just recently approved the resettlement plan. It expects to resettle 434 families within a period of two years. Nonetheless, Jindal’s experience shows that the government has not implemented the lessons it learnt from the previous Vale and Rio Tinto resettlement controversy. It is failing to provide oversight and continues to make the same mistakes.

6.2 Chisumbanje Ethanol Plant (Zimbabwe)

6.2.1 Background
The US$600 million Chisumbanje Ethanol Project is a joint venture between Arda16 and private investors, Macdom and Rating in which after 20 years the Chisumbanje and Arda Estates are handed back to Arda. It is managed by Green Fuel Company. Green Fuel began working on the project in 2009. The plant is the biggest of its kind on the continent. At its maximum it is projected to employ over 9 000 workers (directly and indirectly). 10% of the land has been set aside and irrigated for locals in the community (4000 Hectares). Approximately 100 million litres of ethanol will be produced by late 2012 (enough to supplement 50% of Zimbabwe’s petroleum needs). 18 mega watts of power will be generated as a by product and supplied into the national grid (according to the general manager, this is enough to power 30 000 households). At peak, 50 mega watts of electricity will be generated. Ethanol is a carbon neutral fuel and a major renewable energy option around the world17.
According to the Green Fuel18 chief executive, the plant will have the capacity to produce ethanol that will substitute 100% of all petroleum requirements in the country in less than 10 years. He indicated that the country could save up to US$2 million of revenue a day if ethanol is fully exploited. The plant is currently processing 5 000 tonnes of sugar cane daily producing 150 000liters of ethanol. When fully functional the plant will be able to produce 750 000liters19 of ethanol daily. The ethanol production system is renewable and environmentally friendly. Carbon produced from burning the ethanol is recaptured by the sugar cane in the fields. He claimed that it is a typical carbon credit system as more carbon is being captured than the one being emitted into the atmosphere.
Other bi-products besides ethanol production include animal feeds and electricity. At present the plant is generating 7 megawatts of electrical power with the plant only requiring 2 megawatts and the remainder available for export. It has also created employment for local residents. A total of 4 500 people are employed directly and indirectly through ethanol production with 278 working in the plant. Of the 278 working in the plant only 2 are foreigners20.
One of the major challenges of the project is sustainability of marketing and sale of the ethanol. The Green Fuel Company stated that getting the ethanol to the consumer is the problem as 10 million litres of ethanol have been generated to date but are still in storage. The accumulation of ethanol compelled the plant to close down in early 2012.

6.2.2 Grievances
The ethanol plant has become a white elephant before the benefits of the project could be realised for the reasons given below. Because of its closure hundreds of employees had to be retrenched. Serious tension had built up between the affected communities and the investing company. Loss of arable land There have been disruptions to the sugarcane production at the estate resulting in the arrest of 17 villagers who appeared in court in January 201321. The villagers were arrested in Chisumbanje following clashes with the police over the protracted land dispute. The villagers were protesting and trying to claim back their land, taken over by Green Fuel, the company running the multi-million dollar ethanol plant. This resulted in running battles with the police who ended up using tear gas and firing warning shots into the air to disperse the angry farmers. Sabotaging the investment
Over 500 hectares of sugarcane worth $5 million went up in smoke on Tuesday 29th May 2013 in a suspected case of arson. Manica Post paper blamed this on retrogressive elements in the inclusive government (who according to the paper) have tried at all costs to subvert the will of the people22. 10 villagers were arrested according to ARDA Chairman, Basil Nyabadza. He viewed it as an act of sabotage to ground Green Fuel's operations. There are unverified fears that at the political level that the success of the project would raise the ZanuPF trajectory in Manicaland.
The ARDA chairman went on to say,”We are all aware of the fact that the giant Chisumbanje Ethanol Project, which is fast turning into a white elephant following the suspension of production, is a victim of political bickering which abounds in the Inclusive Government and to some of us it is not surprising at all that the incident occurred at a time when MDC-T has been frustrating progress in the ethanol project”. He made this statement because MDC-T through Mr Elton Mangoma, the then Energy and Power Development Minister publicly stated that blended fuel should not be forced on consumers. The minister further elaborated that government could not ignore the problems surrounding the ethanol project, just so that they could enrich one person (Billy Rautenbach23).
Prior to the arson attack, when the plant operations were suspended owing to non-utilisation of the ethanol, the villagers became impatient. The plant has been closed since early 2012 amid worsening tensions between the community and the plant’s investors24. The community has lost land, livestock and income as a result of the plant. In the wake of the closure of the plant, the government set up a ministerial committee headed by then deputy Prime Minister, A. Mutambara to resolve the differences. It seemingly was making progress with the announcement that it would be opened by April 4th 2013. Since it has not been opened, the villagers are demanding answers25. To date up to five meetings have been held with the village representatives, company representatives, elected councillors, traditional leadership, member of parliament and council officials all sharing a spirit of progress. Inadequate compensation after Displacement
Out of the total 1754 households displaced from their communal lands in Chisumbanje (1060) and Chinyamukwakwa (694) communal lands, only 516 have been resettled. This means that only 29% of the displaced households were properly resettled. The resettled farmers were provided with 0.5 hectares of irrigated land. The remaining 71% were left to fend for themselves since they did not get any compensation from the company. The Chipinge Rural Council according to the lease agreement ceded 2663 hectares to the Ethanol Project which led to communities’ displacement. Loss of property
An asset audit (i.e., land, livestock, crops, buildings, equipment and family size) for each displaced household was not conducted to determine value of compensation and make resettlement meaningful. Thus the 0.5 ha one size fits all is inadequate and inappropriate. Given these considerations, the size of irrigated land provided must range from 0.5 ha to 2 ha. The available land after relocation became inadequate for housing and livestock. Verified reports from the displaced communities indicate that livestock were lost through being shot, drinking contaminated water, or by the levying of undue and oppressive fees for trespassing. Some households lost crops in the process of developing the project’s dams and canals. The value of the crops was appraised through assessments of crop damages carried out by Agritex officials and further enhanced and adjusted by information obtained directly from the affected communities. It is unfortunate that some of these crops were insensitively ploughed down by the Company in the course of canal construction for irrigation. Changes to the cropping pattern
Prior to the establishment of the ethanol project, the households grew food crops, wheat and cotton. After displacement the resettlement strategy was only concerned with sugarcane production, therefore did not take into consideration other requirements of food security for livelihood sustenance of the households. Therefore they cannot survive on one commercial crop, sugarcane particularly when operations have ceased at the plant. Reduced access to public services
The resettlement strategy did not take into account other services necessary for the sustenance of livelihoods such as schools, clinics and general business and social infrastructure. Hence the displaced households are at present far away from such services. It is not surprising that tension has been mounting between the investors and the affected communities are clearly disadvantaged by the investment.

6.3 Market-based land reform; Zambia
6.3.1 Background

The government at the behest of donors implemented market-based land tenure reform legislation in 1995. This legislation aimed to improve the security of land tenure and to promote development through investment. Land market reform was one of the key conditionalities that the Zambian government was required to meet in order to restructure its international debt. The 1995 Act made it possible for land per se– not just improvements on land – to be bought and sold26.
A second aspect of the Land Act was that it eased restrictions on land-ownership by foreigners. The Act made it possible for approved foreign investors, foreigners who are Zambian residents or foreigners who have received personal presidential consent to acquire title to land.
Third, the 1995 Land Act created a Lands Tribunal to protect leaseholders and customary rights holders from abuse and to ease congestion within the High Court. The Tribunal’s broad mandate is to ‘inquire into and make awards and decisions relating to land’ (GRZ 1995: Part IV, Section 22). The Tribunal was intended to be informal, low-cost and mobile so as to be accessible to rural and low income Zambians.
Fourth, the Act made both cosmetic and substantive changes to the administration of customary land tenure. The categories of reserve and trust lands were amalgamated into a new category: ‘customary areas’. The Act explicitly recognised existing rights to land in customary areas. The Act, however, made it easier for both outside investors and indigenous Zambians living on customary lands to acquire private title.
One of the major beneficiaries of market-based land reform is Chayton Capital, a British company based in South Africa. The co-founder of the company, Neil Crowder has stated that Chayton Capital is focusing on food crops such as maize, soya and wheat for markets in southern Africa. He believes well-managed commercial farming operations in Africa will benefit from the growing markets. He claimed that agriculture as a broad investment theme has increasingly gained momentum in the past several years (since the food crisis). The reason for the optimism is that although agriculture previously displayed cyclical, commodity-type returns, there are irrefutable indicators that demonstrate a period of sustainable growth due to a combination of global factors that include rising population, rising income levels in emerging markets, and a growing scarcity of arable land and water27.
Africa's vast, fertile and affordable land that has potential for high productivity and cash returns has attracted a new breed of investors under a new stable liberal investment establishment. With land available at prices that are attractive in an international context28, much of sub-Saharan Africa benefits from rich soil and a climate that allows for doublecropping and strong cash returns relative to other markets. Furthermore, the investors are working with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, to obtain political risk insurance on their investments

The perceived benefits of investments to national interests are food security, affordability and technology transfer to southern Africa.

6.3.2 Controversy of land reform
The land tenure reform became complex, indeterminate, and contentious on the ground, particularly in relation to the ninety-four per cent of Zambian land that is held in ‘customary’ tenure. The provisions of the Land Act and the un-democratic manner in which it was drafted and passed into law, have led to continued and wide-spread animosity to the Act by many civil society organisations, opposition politicians and many traditional leaders.
Under the provisions of the Act, investors (whether foreign or domestic) can convert land in customary areas to leasehold if the investor’s proposed use of the land is deemed to be of ‘community’ or national interest. The Land Act also made it easier for indigenous Zambians to acquire private title to their lands through this legal conversion. By converting their customary holdings to leasehold, the government argued, villagers would be able to use their land as collateral to secure credit to invest in farms and businesses. The Act was designed to permanently diminish the amount of land held under communal tenure and to open up more land for investment. Once a villager or investor is granted a leasehold title for a piece of land, it ceases to be customary land and becomes state, essentially private, land. Customary rights are extinguished and the land cannot be reconverted back to customary tenure.

6.3.3 Impact of reforms-village level
Market-based reforms have mostly been felt at the village level as customary land shrinks through conversions to state or private land. Extent of conversions
Updated data is not readily available on the conversions from customary to state land at the Ministry of Lands. Nonetheless, it is still possible to establish the trend of conversions. According to officials at the Ministry of Lands, following the Land Act, conversions increased rapidly until they levelled off in the late 1990s at around two thousand per year – the maximum number that the limited capacity of the Ministry of Lands could process annually29. Although conversions have taken place throughout the whole country, they have been concentrated in peri-urban areas and in those parts of Zambia where commercial agriculture and tourism have the most potential. They are most pronounced in rural districts surrounding Lusaka and the cities of the Copperbelt and in the vicinity of prime tourist destinations (Livingstone and Victoria Falls, South Luangwa National Park and Lower Zambezi National Park). Beneficiaries of Conversion: the elites
A glimpse of the allocation of leases in several chieftaincies provides a snapshot of the economically skewed character of titling in Zambia. In the chieftaincies of Mwemba and Sinazongwe along Lake Kariba, according to district officials and local surveyors, there have been several dozens of title conversions in these areas during the past decade. Of the titles issued, eight have been acquired by outside (white and ethnic Indian) investors for commercial fishing, tourism, crocodile farming, or game ranching. Successful local shopkeepers, retired civil servants, district-level officials, and the chiefs’ family members have acquired the remainder of the titles. No poor or even middle income households have secured leasehold land. The converted plots range in size from 150 to several thousand hectares, but most are near the legal limit of 250 hectares. Therefore these land reforms have benefited the elite at the expense of the rural poor majority who are actually losing access to customary land. Increase in foreign ownership
One of the primary aims of the 1995 Land Act was to promote foreign investment, and the Act made it far easier for non-Zambians to acquire land than it had been under the Kaunda regime. In recent years, therefore, there has been a significant increase in the amount of land in Zambia owned by foreigners. According to the Zambia Investment Centre, 240 investment certificates were issued to large-scale commercial farmers between 1995 and December 200230. Land speculation
The titling of customary lands has led to widespread land speculation. Investors pay nothing for the customary lands they convert – barring registration and survey costs and the ‘facilitation payments’ that are often given to chiefs. These costs, though often prohibitive for communal farmers, are only a small portion of the market value of the land. Some nationals and foreigners have sought to profit from the difference between the market value of titled land and the low cost of acquiring it. They have acted as middlemen by acquiring land for next to nothing, and then selling it on at a significant profit. This speculative practice has taken place extensively on agricultural land, but is perhaps most common in tourist areas. In Mfue next to South Luangwa National Park, there are several notorious cases in which South African investors have acquired land at no cost from Chief Nkanya only to sell it on to a safari operator for tens and in some cases hundreds of thousands of dollars. In one case, a South African investor was able to acquire large tracts of land from the chief. Once he had the title, the investor returned to Johannesburg where he sold the title for $200,000. In all these cases, the chief was led to believe that these particular individuals were investing for the long term and thought that he was granting them the use, but not the ownership of these lands.
Extractive Chrome Mining in Zimbabwe
Chrome mining has the potential to make meaningful contribution to the growth of the economy through revenue generation and employment creation. For the period 2009 to 2011, the sector made exports worth US$53, 6 million from an average production of about 500 000 tonnes per year. During the year 2013, production is expected to slow down.
Amongst the challenges deflate growth are: an unevenly balanced claims structure, unfavourable prices of chrome both on the local and international markets, lack of investment

into the sector, the disempowerment of mining communities, conflicts between farmers and miners over land and massive environmental degradation by small-scale chrome miners.
Chrome is an important base metal used in the stainless steel industry. At present, the product is on demand in China and Singapore. It is estimated that Zimbabwe and South Africa have more than 80% of the world’s ore reserves. Chrome mining in Zimbabwe is mainly concentrated on the Great Dyke and it is estimated that the Dyke hosts about 10 billion tones of unproven reserves. Most of the chrome claims are located in Mutorashanga, Chegutu, Kadoma, Kwekwe and Lalapanzi.
Currently, the sector employs about 2 865 people and it is has the potential to employ over 7 000 people in a conducive environment. Chrome mining is dominated by two companies, Zimasco and Zimalloys (Benscore) that hold 70% of the 4359 of registered blocks of claims. Some of the claims were obtained as far back as 1904.This had led to the emergence of smallscale tributary/contractors miners who are sub-contracted to mine for the big companies who then are paid company dictated low prices. They got between $55-70/tonne when the international price ranged between $120-235/tonne with very little room for negotiations31. Moreover, the sector has attracted 7 Chinese companies who use the small-scale miners as fronts.
Although these tributary contractors are expected to rehabilitate the environment, they were not as a result of the little revenues that they were getting, a huge disincentive for rehabilitation work. Pits that were dug 20 years ago have not been refilled. Legally the claim holder has the responsibility of rehabilitating the environment and is unjustly overburdening the contractors with this task.
The majority of the independent small scale chrome producers joined the sector in 2009 when government opened up a window of opportunity for miners to export chrome. However, when government banned chrome exports in 2011, there was a huge outcry from the smallscale producers that they had been deprived of an opportunity to actively participate in the chrome sector.
Impact of chrome mining
Workers at a Chinese owned company, Sanhei, complain about labour abuses such as low pay and long working hours.
The communities of Mapanzure in Zvishavane and Horseshoe in Guruve expressed concerns over the ad hoc corporate social responsibility (CSR) practised by Chinese companies. It is performed when an emergency need arises in the community, such getting beaten by a snake or pregnant women in labour pains. Only then, is an ambulance hired for the victim. Community expectations on CSR were for bigger projects such as electrifying community institutions, rehabilitating roads and provision of educational materials in schools32

The mining companies do not respect traditional authority, represented by the chiefs, and can begin operating without consulting the chiefs without the knowledge of the cultural values and practices of the area. At one time Chief Mapanzure ordered the miners to cease operations in his area of jurisdiction because the community was not benefiting. After negotiations, operations resumed but life of the community has not improved for the better.
There were several conflicts between the miners and farmers over land. Some of the miners were taking over fertile land and transforming it into chrome mining, thus creating food insecurity within the community. Livestock and human beings are victims of chrome mining by falling into open pits left by the miners. Grazing Land is also dwindling as more land is being taken up by chrome mining. It is the wish of the community to be empowered through ownership of these claims, but have inadequate information on how they can do that and the companies are also unwilling to surrender these claims to community members.


The three case studies show that rural investments have brought acrimonious relations between the investor and the affected communities that have been impoverished. In Tete province angry farmers have blocked transportation of coal to the port and protested on the streets while in Zimbabwe the affected farmers clashed with the police and burnt the sugarcane fields and some are in custody awaiting trial. Land reform in Zambia is benefiting the elites and foreigners as more customary land is converted into private land. The governments have failed to provide adequate oversight into the operations of the investors who are practising to a large extent self-regulation and undermining community rights and destroying their livelihoods. A rethinking of the whole investment framework guidelines needs to be worked out in order to get a win-win scenario so that both parties reap tangible benefits from the investment.

7.0 Recommendations

7.1 Inclusivity of all stakeholders at planning
An inclusive and consultative approach must be adopted in rural investment. At the moment there is an agreement between government and the investor without sensitivity to the interests of local authorities and the affected communities. The investor then practices self-regulation with little oversight from central government and community rights and interests are subverted. Through these interactions the effects of the investments on communities will be identified and corrective measures worked out. The first step strengthens the government regulations on rural investments and broadens community participation. It also provides clearer guidelines for future resettlements.

7.2 Provision of public social services
Where affected communities are resettle on sites far away from public services such as schools, clinics and poor road infrastructure, the facilities must be constructed and infrastructure upgraded so that the new settlers are not inconvenienced. Such community investments should be an integral part of the investor’s social corporate responsibility.

7.3 Compensation provision
An asset audit (i.e., land, livestock, crops, buildings, equipment and family size) for each household must be conducted prior to the establishment of the investment so that the compensation and resettlement is meaningful and concomitant to property and public services loss. Adequate suitable land must be identified for the new settlers. In the case of Chisumbanje project the size of irrigated land provided must range from 0.5 ha to 2 ha as the 0.5 ha one size fits all is inadequate. Additional land must be provided for housing and livestock. All the affected households must be considered for compensation and not the piecemeal solution in Chisumbanje where only 29% of resettled farmers have access to irrigation on 0.5ha of land. In addition, in the case of Chisumbanje besides sugar cane production they must also be enabled to grow other cash crops such as cotton and wheat, which were the bed-rock of commercial agriculture. Although it is not part of the sugarcane out grower scheme, the Company must play a facilitative role in this extra endeavour, as an effort to address the broader social and commercial concerns of the community33.

7.4 Regularisation of land uses
The local rural government authorities should immediately regularise all land acquisitions to the projects and the resettled communities in accordance with the law by completing the appropriate lease agreements with the stakeholders. This includes land ceded to the investor and new appropriate land identified for resettlement. Such an act brings harmony between investor and displaced communities before commencement of project implementation.

7.5 Creation of job opportunities
The first preference for employment must be to the locals. The investor must consider labour from other parts of the country only where the jobs demand special skills unavailable within the communities. In this regard it is necessary in the long term to set up technical colleges in the nearest urban centre where locals can be trained in those skills. The employment of 400 workers from Tete province out of a workforce of 1400 appears suspiciously low and needs a strong government oversight. Similarly, Green Fuels employment of 202 workers from Chipinge district out of a total of 975 workers is unacceptably low translating into 20.7%. Out of an overall employment of 3237 people only 1099 are from the Chipinge District, meaning 34%, which is clearly unacceptable34. The companies must endeavour to raise their overall local employment obligations. In particular, all the low skill jobs must go to locals.

7.6 Installation of water purification system
The investor must quickly install a water purification system for the contaminated water from the plant before it is recycled for human and livestock consumption in the case of Chisumbanje Ethanol project. Care must be taken that drinking sources for people and livestock are not linked or exposed to the fertilizer rich by-product water from the ethanol plant, which is recycled for irrigation. The Project must take cognizance of the fact that households will have livestock and thus mechanism of coexistence with this reality must be put in place35.

7.7 Setting up monitoring committee

A monitoring committee must be established to ensure that each investment is implemented according to agreed guidelines and each party is fulfilling its obligations. In this regard promises are translated into reality and reduce the scales of grievances that are a source of grievances. The committee must include government officials, company agent, local authority and community elected representatives. This should be done to avoid future acrimonious community relations between investor and the affected communities and provide an immediate insight into the company’s operations to the government.


1. AFDB, A Global Rush for Africa’s Land: Risks and Opportunities:, Oct 17 2012

2. Afrique contemporaine, Nº 237 2011 Africa land Grabs , 2011

3. Against the Grain, “Responsible Farmland Investing?” August 2012.

4. AIAS Workshop on Scramble for Africa’s resources (primitive accumulation): 15/01/2013, Bronte Hotel, Harare

5. BBC, “Mozambique residents 'hurt by' Rio Tinto and Vale mines” at 23 May 2013 Last updated at 16:44 GMT

6. Bell Alex, “Villagers demand answers as ethanol project remains shut” at

7. Breaking News, “Rio Tinto rapped over Mozambique mines” at, May 23, 2013 11:38PM

8. Brown Taylor, “Contestation, confusion and corruption: Market-based land reform in Zambia”

9. Chininga report: Chrome Mining Sector in Zimbabwe, 2013.

10. Farmland Grab, MIGA and Chayton Capital LLP to support agribusiness investments in southern Africa, Published: 10 May 2010,

11. Grain Organisation, Modernising African Agriculture: Who benefits?, ACB, AFSA and others | 17 May 2013

12. Grain Organisation, “The G8 and Land Grabs in Africa”. March 2008

13. Jackson J “Jindal faces off with community over mining land in Mozambique,” Business Day 3/9/201 3

14. Lopes Marina, UPDATE 2-Miners Vale, Rio Tinto accused of neglecting displaced Mozambicans, Thu May 23, 2013 12:15pm BST

15. Lusaka Times, “Compensate Solwezi residents displaced by US$1 billion Trident mine project – CCZ”,: November 14, 2011 1:50 pm

16. Lusaka Voice “Chiefs unhappy with locals’ displacement by investors”, Published on July 6, 2013.

17. Manica Post Editorial Comment: Chisumbanje ethanol: Spare us this madness, Manica Post at

18. Maritz J, A really big opportunity: Inside PSG’s $46m Zambian farming deal at, July 6, 2012 at 09:52

19. Ministry of Science and Technology, ”Chisumbanje Ethanol Plant Tour” at

20. Mutambo Clinton, An overview of the Chisumbanje Green Fuel ethanol project,

21. Nuvunga W, “Bridging the gap in Mozambique's coal town?” Tete, Mozambique at

22. Nyagah N, “Rich African farms draw international investors”, At, Wed, 02 Mar 2011 09:01, Nelly Nyagah

23. Private Equity Africa, “Chayton sells 81% of fund, changes to holding company” at, April 3, 2012

24. Rural21, International Forum 2010, FOREIGN DIRECT INVESTMENT IN MOZAMBIQUE

25. Stimulating Smallholder Agricultural Growth, February 23, 2006

26. The Guardian “New international land deals database reveals rush to buy up Africa”

27. The Zimbabwean, ”President dismisses danger of land grabbing” at

28. Tichaona Sibanda, Chisumbanje villagers remanded in custody at

29. World Bank Report Report No. 32416-MZ, Mozambique Agricultural Development Strategy

Our Dream

SEATINI’s dream for a future world is one without war and violence. It is one where nobody needs to go hungry or thirsty, or without clothing, shelter, clean water, ample sources of energy, good health and education, and the higher pursuits of knowledge. It is a dream of a borderless world, where people move freely between climes and cultures, and where social structures, inclusion, culture and dignity give more status than consumer goods. It is a world where the benefits of the phenomenal advancement of science and technology are available to all, where these are applied to satisfy all the reasonable and sensible material needs of the world’s populations, where survival, access to basic needs and dignity are not dependent on paid labour


226 Samora Machel Avenue,Eastlea Harare, Zimbabwe 

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Informal Sector Dialogue Meetings Synthesised Report for 2015

1. Background

Zimbabwe, like other African countries, has experienced a huge seismic shift from the formal to the informal sector as necessitated by increasing company closures and massive job losses across the country. The economy rapidly deteriorated in the 1990s following implementation of Multilateral Financial Institutions (IMF and World Bank) driven structural adjustment policies. Economic deterioration was worsened by the implementation of a Land Reform Programme officially launched in 2002. In 2009, the economy descended on an ailing economic recovery phase characterised by dwindling industrial capacity utilization, huge external debt, deflation and company closures cumulatively increasing household poverty. Massive production of graduates and other school leavers in a jobless economy imply school leavers cannot get gainful employment in the formal sector; hence they join the ranks of the unemployed - later forced into informal activity. Rural to urban migration driven by anticipation of urban employment and risk-ridden agricultural production being threatened by climate change has contributed to rapid growth of the informal sector. In an effort to earn a living, the unemployed and their siblings have resorted to informal activities in retailing, manufacturing, mining and transport. Wholesale vending is the outstanding informal activity in the central business districts of urban centres violating council by-laws; a development that has alarmed both the government and the urban authorities. The informal sector in Zimbabwe has become a force to reckon with and is now the basic and easy way to earn a living in an economy deficient of formal jobs.

2. Magnitude of Informalisation

Evidence suggests that the informal sector has grown from less than 10% in 1980 to 27% in 1991 and 60% in 2012 (LEDRIZ, 2015; Mugano, 2015). A Gemini study (1991) found about 845 000 informal enterprises in the country employing a total of 1.6 million people. In 2013, FinScope found 2.8 million micro, small and medium businesses operating in Zimbabwe (85 percent being unregistered) employing 5.7 million informal jobs. These businesses generate an estimated turnover of 7.4 billion US dollars, according to the FinScope survey. In 2014, 94% of the employed people aged 15 years and above and 98% of the youths aged 15-24 years were found to be informally employed. Informal employment became the new social base as people undertake diverse activities in communal agriculture, trade and commerce, manufacturing, mining, education and transport as primary sources of income. Informal employment has further increased between 2014 and 2015 as the economy slowed down from growth of 3% in 2014 to an estimated 1.5% in 2015. Massive company closures that occurred between 2011 and 2015 increased the extent of informalization. Informal employment increased by about 29% between 2011 and 2014 when the formal employment is believed to have shrunk by 40% as an annual average of 35 400 people were retrenched in the seven years to 2011 while an average of 75 600 people were retrenched between 2011 and 2014 (The Economist, 2015). Between 2011 and 2014, 4 610 companies closed down affecting 55 443 workers, their dependence and the surrounding communities (G.O.Z, 2014 - 2015 National Budget). In 2015, about 20 000 workers were fired between July 17 and August 22 following a Supreme court ruling that allowed employers to fire workers on three months’ notice. The remaining employed workers (about 87.5%) earn below the consumption poverty datum line, forcing them to undertake secondary activities to supplement income. Zimbabwe’s informal sector is proportionately large and expanding at a very rapid rate as retrenchments mounts and formal employment slides while the supply of labour firms. The obtaining situation paints a gloomy future that is characterised by deteriorating socioeconomic and political climate as the informal sector is fast becoming the new political battleground. The structural shift has been recognised by the government. The Minister of Finance during a Parliamentary question time confirmed as much in February 2014, “Our economy is now informal…That is the reality of our economy and it is a reality we must recognise and take measures on how to tap into this sector.” This is due to the wholesale closure of manufacturing companies, the entrance of school leavers onto the job market and the traditional rural-urban migration. Informal sector, particularly street vending, becomes the source of livelihood for the aforementioned social groups.

3. Authorities’ response

The city fathers have been alarmed by the ballooning informal vending that has uncontrollably mushroomed in the central business district, inconveniencing the public and formal business outlets. Vegetables and imported Chinese wares are being sold on the pavements and in the process violating council by-laws. The response of the authorities has been to unleash the law enforcement agents on them. However, the success of such measures has been short-lived because the next day or after working hours the vendors and traders will be back on the streets. The designated areas for vending have been condemned by the vendors as not strategic because they are far away from their clients. One of the fundamental reasons for the failure of the authorities measures is that the decisions are unilateral, done without the involvement of the informal vendors. Forced removal of vendors from the streets without understanding their circumstances is likely to induce theft, robberies, prostitution, etc in an effort to earn a living. The government has also hinted on formalising the informal sector for the purposes of broadening the tax base. Minister of Finance indicated that there is urgent need to formalise the dominant informal sector to broaden government revenue, “... there has been a structural shift to informal economy- the larger economy presides in the informal sector and this cannot be ignored. More money is flowing in the informal sector than the formal sector but the informal sector is difficult to tax.” Government’s strategy is biased towards taxing the informal sector rather than protecting and promoting the sector through decent infrastructure and social services, and requisite legislation. The approach

Our Dream

SEATINI’s dream for a future world is one without war and violence. It is one where nobody needs to go hungry or thirsty, or without clothing, shelter, clean water, ample sources of energy, good health and education, and the higher pursuits of knowledge. It is a dream of a borderless world, where people move freely between climes and cultures, and where social structures, inclusion, culture and dignity give more status than consumer goods. It is a world where the benefits of the phenomenal advancement of science and technology are available to all, where these are applied to satisfy all the reasonable and sensible material needs of the world’s populations, where survival, access to basic needs and dignity are not dependent on paid labour


226 Samora Machel Avenue,Eastlea Harare, Zimbabwe 

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Scramble for Africa’s Resources: Role of BRICS countries (Published 2014)


Since the beginning of the 21st century there has been an increased expansion of new investments in Africa not just by the previous colonising nations (former European Union colonial powers), but also by emerging economies known collectively as the BRICS countries (Brazil, Russia, India China and South Africa) as well as other relatively smaller emerging nations from the Middle East (Saudi Arabia, Kuwait and Qatar) and East Asian countries (Malaysia, Indonesia and South Korea). Although the phenomenon of an increase in rural investments is global and not limited to Africa, the destination of 40% of the investments has been Africa. Agribusiness and extractive industries have rapidly spread across the globe since the global financial and food crises of 2008. The net effect of such investments has been to take food production out of the hands of farmers and local communities. The denial of land to smallholder farmers through displacement of communities without adequate compensation is creating a serious food insecurity problem as they are pushed from fertile land into barren land unsuitable for small scale agricultural activities that have for generations’ sustained livelihoods. These rural investments often referred to as “Land Grabbing”, have become an incontestable threat to the livelihoods of smallscale farmers particularly in Africa where 80% of the population is dependent on small scale agricultural activities. In reality the new investments have commercialised agriculture through contract farming that induce farmers to switch to high value crops from food crops, consumption of imported food as a substitute for traditional foods, changes from natural forests to reserved land for tourism and private estates for the production of crops used for bio-fuel production.

Who are the largest external investors?

According to a Grain Report (2013), by the year 2012, 35 million of agricultural prime land has been leased to foreign companies in 66 countries over the past three years for food and alternative fuel production (excluding extractive industries). The most affected countries in Southern Africa were the Democratic Republic of Congo with 8.1m ha leased followed by Mozambique with **** constituting ****% of arable land. The top investors around the world are; UK(4.4m ha), USA (3.7m ha) and China (3.4m ha). Hence these empirical figures show that it is the foreign investors from industrialised countries led by the United Kingdom that are seeking land deals in Africa particularly in the Democratic Republic of Congo. It is estimated that more than half of the 56 million hectares of land sought after by foreign investors globally is located in sub-Saharan Africa. The Democratic Republic of Congo and Mozambique have the highest share of foreign investor driven land deals relative to total arable land of close to 50% and 21%, respectively (Africa Development Bank 2012). Within African countries, the urgent need to develop agriculture and the lack of financial support for capital intensive projects such as irrigation and infrastructure development aimed at improving productivity and creation of thousands of jobs to improve rural livelihoods, has facilitated large scale land deals.

Role of BRICS

The purpose of this paper is to demonstrate the role of the BRICS countries in the scramble for resources in southern Africa. As already depicted above, China features as the third largest investor in agribusiness. Since the turn of the 21st century the region has increasingly established economic (trade and investment) and social relations with the emerging economies, Brazil, China, India and South Africa (the BRICS countries). These relations have been hailed at a political level as a positive move demonstrating South-South Cooperation as opposed to the traditional resented North-South relations. These investments are taking place against a backdrop of increased pressure from industrialised countries on developing countries to open up their economies through multilateral (WTO) and bilateral (FTAs and BITs) negotiations. The new South-South Cooperation is not signifying implicitly a real change in the structure of the southern African countries and benefits to its people, but a continuation of the same relationship established by the European countries during the colonial era sometimes in a more brazen manner particularly with regards to labour and the environment. The BRICS countries have invested in the same extractive industries, mainly in mining and agriculture for export as raw materials to parent companies in their own countries. The scale and type of BRICS investments into southern Africa are given in appendix 1. The study focused in detail on 5 southern African countries (Angola, Mozambique, Namibia, Zambia and Zimbabwe), but where necessary it will provide evidence from other countries within the region.

Our Dream

SEATINI’s dream for a future world is one without war and violence. It is one where nobody needs to go hungry or thirsty, or without clothing, shelter, clean water, ample sources of energy, good health and education, and the higher pursuits of knowledge. It is a dream of a borderless world, where people move freely between climes and cultures, and where social structures, inclusion, culture and dignity give more status than consumer goods. It is a world where the benefits of the phenomenal advancement of science and technology are available to all, where these are applied to satisfy all the reasonable and sensible material needs of the world’s populations, where survival, access to basic needs and dignity are not dependent on paid labour


226 Samora Machel Avenue,Eastlea Harare, Zimbabwe 

Phone : +263 4 776 418

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EPA Update Policy Brief (Published 2014)


Economic Partnership Agreements (EPAs) negotiations started in 2002 between the European Union (EU) and Africa, Caribbean and Pacific (ACP) countries, based on the Cotonou Agreement aimed at integrating ACP states into the world economy. The Cotonou agreement in 2000 made provision for bilateral trade agreements (EPAs) to replace the unilateral LOME Conventions that allowed duty-free and quota-free access of ACP countries exports to the EU that were challenged at the WTO negotiations by other non-ACP countries without preferential access to the EU market. Preferential treatment is incompatible with the World Trade Organisation (WTO) rules. The original Lome Conventions were non-reciprocal while the EPA will be reciprocal. The negotiations are focused on trade in tangible goods, investments and services. The controversial issues that arose during the negotiations are broadly focused on export taxes, Most Favoured Nation (MFN) and National Treatment (NT) clauses, agricultural subsidies and market access, and economic development cooperation, rules of origin and dispute settlement. The EPA negotiations divided the southern African region into two different blocs;

  •  the Eastern and Southern African (ESA) bloc comprising Madagascar, Malawi, Mauritius, Seychelles, Zambia and Zimbabwe and,
  • the Southern African Development Community (SADC) bloc comprising Angola, Botswana, Lesotho, Mozambique, Namibia, South Africa, Swaziland and Tanzania. From the onset, it can be observed that the bilateral negotiations effectively disrupted the region initiative of regional integration within the SADC region.

Besides the disruption of regional integration, this division into two negotiating trading blocs created implementation challenges such as multiple memberships and weakened regional bargaining power. The negotiations started in 2002 under a waiver called the Cotonou Agreement. In practice, the negotiations progressed very slowly than what had been originally anticipated. They were supposed to be concluded by 2007. Regulation 1528 was therefore adopted in December 20007 as a temporary solution to allow for more time to conclude the EPA negotiations and the ratification process. There has been no agreement on contentious issues such as MFN clause, cumulation, export taxes, agricultural subsidies and market access.

Current EU-Africa trade status.

Although the overall global share of EU trade with Africa has been declining, trade remains significant. In absolute terms exports from Africa to the EU increased from USD9bn in 2000 to USD213bn in 2013. The largest EU exporters to Africa in 2013 were France (18%), Germany (14%), and Italy (13%). The largest EU importers of African products are Spain (17%) Italy (16%), France (16%), UK (13%). Manufactured goods comprised 70% of all EU exports to Africa whilst energy constituted 64% of imports. Africa exports to EU are mainly raw materials especially crude oil raising the question of value addition and regional integration. The major trading partners with EU from Africa are South Africa, Nigeria, Algeria and Libya.

State of EPA Negotiations

Although the negotiations have been slow and stalled in some regions, four countries in southern Africa had signed the interim EPA on tangible goods by 2009, namely Madagascar, Mauritius, Seychelles and Zimbabwe. Given the EU deadline for negotiations of October 1, 2014, others fearing trade disruption, signed the interim EPA such as Botswana, Lesotho, Mozambique, Namibia and Swaziland. Malawi and Zambia initialled but have not signed the interim EPA. Angola and the Democratic Republic of Congo (DRC) have not initialled the agreement. Thus the outlook on the status of EPA is varied. The major casualty has been regional integration, a SADC initiative.
Botswana, Namibia and Swaziland are classified as developing countries and do not enjoy the Everything But Arms (EBA) EU offer to Least Developed Countries (LDCs), therefore feared trade disruption particularly of beef, grapes and sugar respectively. Angola, DRC, Malawi and Zambia enjoy the LDCs status and can still trade with the EU under the EBA duty-free and quota free. South Africa can still trade under the Trade and Development Cooperation Agreement (TDCA) signed in 1999.

Scepticism of the EPA

Judging from the previous experience that southern African countries have had with economic liberalisation programs such as the structural adjustments (SAPs) implemented in the late 1980s and early 1990s, African states are sceptical about the agreement, hence the emergence of the contentious issues. They signed because of immense pressure from the European Commission (EC).

Most favoured nation

The Most Favoured Nation is one of the contentious issues included in the agreement at the insistence of the European Union (EU). It means that any trade or investment concession that a country grants to another trading partner enjoying more than one percent of world merchandise is automatically extended to the EU. All the countries in southern Africa have established good relations with BRICS countries (Brazil, Russia, India and South Africa) and found it difficult to accept a deal that compels them to extend to EU concessions that they had chosen to make. Therefore, EPA does not promote their best interests. In practice it levels the playing field for all foreign investors. This was viewed as a defence mechanism for European interests against the onslaught of the BRICS countries.

National treatment

The national treatment clause does not allow discrimination between foreign and domestic investors. Both should be afforded equal treatment. National Treatment (NT) entails providing same treatment to both domestic and foreign players without any form of discrimination. Governments are prohibited from offering tenders for government procurement to exclusively national investors even if it might be their policy to encourage domestic industrialisation. It is one of the basic reasons why they had imposed export taxes. It is already a foregone conclusion that domestic suppliers cannot compete favourably with their EU counterparts. The result is destruction or scaling down of domestic industrial activities (contraction of manufacturing) with the accompanying loss of jobs. In both cased i.e. MFN and NT host states policy space is severely restricted.

Removal of export taxes

The EU is calling for the removal of export taxes on raw materials. However, export taxes were used historically as a development trade tool to discourage exports of raw materials and incentivise domestic industry growth by availing it cheap and adequate raw materials as well as raising financial resources for other essential development needs such as provision of public health and education services. It also acts as a protective measure for domestic industries from foreign competition.

Agricultural subsidies and market access

With regard to trade in agriculture, it is practically impossible for southern African countries to compete with their European counterparts that enjoy domestic support and export subsidies and need to be protected. Hence the tariff phase-down is a threat that will wipe out domestic agricultural production particularly by small-scale farmers. Already some European countries have been dumping foreign products on the African market and ruining the domestic producers. Most of them do not have legal safeguard measures such as the special safeguard mechanism (SSM) that can legally be used to regulate imports and protect domestic producers. Furthermore agricultural export commodity producers become uncompetitive on the European market and face the hindrance of SPSS and TBTs measures due to supply side constraints. This has become the case with cotton growers in southern Africa whose production has largely been abandoned.

Development assistance

On the accessing EDF by ACP, it was noted that the funds will not be available for ACP first due to the EU changing its goal posts through its bureaucratic procedures. In any case by 2015, funds to Africa from the EU will be reduced as they will be diverted to address critical issues such as terrorism and Ebola. The European Union itself has slipped into economic deflation. African states need to be self reliant and pull its resources ( natural resources) in order to strengthen its industries. Promoting inter regional trade was seen as essential within the SADC and COMESA markets.

Intellectual property rights

The strict enforcement of intellectual property rights has hit the pharmaceutical industries hard through the discouragement of the manufacture of cheap generic drugs that were accessible to the generality of the ordinary people. Consequently, medical care has risen sharply beyond the reach of the majority. Most of the drugs are now imported.

Dispute Settlement Mechanism

Any violation of the above clauses empowers a foreign investor to sue a host state at the World Bank International Centre for the Settlement of Investment Disputes (ICSID). They can sue even for loss of potential future profit. In all the recorded cases the foreign investors win at the expense of host states. The ICSID provides almost 100% protections against possible expropriation by the host state. These investments are guaranteed by the WB.

EPA Implementation Challenges

For those countries that have signed and ratified the interim EPAS there are challenges to implementation. These challenges include;

a. rules of origin given the cumulation issue  and COMESA Common External Tariff (CET) not operational

b. difficult economic conditions for some countries such as Zimbabwe, tariff phase down challenges

c. EU’s domestic support and export subsidies to its agriculture sector- too competitive for ACP products to enter EU market and no commitments to reduce this support

d. SPS (sanitary phyto-sanitary) and TBT (technical barriers to trade) measures by EU makes it difficult to access EU market especially in agriculture

e. No binding commitment on development, no provision of predictable additional resources to address challenges and build capacity

f. Supply side constraints –industrial development is slow

g. Erosion of preferential market access – EU negotiating other FTAs with India, ASEAN, etc. African countries also negotiating regional pacts such as the TFTA to be established in 2014 and the confidential FTA in 2017

h. The coming on board of the BRICS bloc (Brazil, Russia, India and China) -China has become an important trading partner for Africa and has potential to change direction of trade for some countries


The Zimbabwe government has formed an inclusive EPA committee comprising, both public and private sectors as well as the civil society and SEATINI was invited and is now a member of that committee. Its brief is to spearhead and make policy recommendations for the implementation of the interim EPA. SEATINI welcomed the invitation as it would provide it with first hand information on the challenges to EPA implementation.
African countries should have consolidated the gains of regional integration before negotiating the EPAs. It is quite evident that ACP governments are put under pressure to sign the EPAs by the EU against their own interests (e.g. Namibian case which signed the interim EPA under protest). In most cases within our countries there is a small powerful export-oriented lobby group that will advocate for the signing of EPAs so that their business interests are not disrupted, e.g. the tobacco industry in Zimbabwe, beef producers in Botswana, table grapes producers in Namibia and sugar producers in Swaziland. This is done despite the harmful effects of the agreement to the wider and less powerful economic sectors employing the majority of the population.


  • Africa needs to build its own capacity to add value to its products before exporting to the EU than continuing to just export unprocessed raw materials. Furthermore, the quality of the existing products needs to be improved.
  • There is need to increase allocation and release of additional financial resources to meet developmental cooperation which is the pillar of the EPAs especially to address supply side constraints such as infrastructure.
  • Africa should not lose sight of regional integrating efforts that have seen several missed deadlines because of the EPAs e.g. SADC and Common Market for Eastern and Southern Africa (COMESA) Customs Union, Tripartite Free trade Agreement (TFTA) in order to strengthen regional development.
  • There should be a delay in the implementation of the EPAs as more time for implementation should be given for countries that are facing economic difficulties beyond the 15years agreed. This allows time to adjust the local industries as well as build enough capacity for manufacturers.


  1. AllAfrica, “The Endgame of the EU-SADC EPA Negotiations- Southern Africa” at
  2. SEATINI, "EPA Update Roundtable Stakeholders Meeting Report", 3 December, 2014, Crowne Plaza Hotel, Harare.
  3. Tralac, “Conclusion of the Economic Partnership Agreement” at
  4. Tralac, “The EU’s EPA negotiations with the Southern African Development Community (SADC)”: July 2014 update at
  5. Wentzel Webber, “The grim EPA – where do we stand?” posted in Legal Articles on 17th December 2014 at

Our Dream

SEATINI’s dream for a future world is one without war and violence. It is one where nobody needs to go hungry or thirsty, or without clothing, shelter, clean water, ample sources of energy, good health and education, and the higher pursuits of knowledge. It is a dream of a borderless world, where people move freely between climes and cultures, and where social structures, inclusion, culture and dignity give more status than consumer goods. It is a world where the benefits of the phenomenal advancement of science and technology are available to all, where these are applied to satisfy all the reasonable and sensible material needs of the world’s populations, where survival, access to basic needs and dignity are not dependent on paid labour


226 Samora Machel Avenue,Eastlea Harare, Zimbabwe 

Phone : +263 4 776 418

Email :



You can find us on various social platforms. Connect with us through your social media and experience some of the benefits of being a member