The Democratic Republic of Congo (DRC) is immensely rich in resources but past conflict has held back the realization of this wealth, leaving its people amongst the poorest in Africa. The country is expected to be home to the world’s eleventh largest populationa by 2050. Raw mineral deposits are estimated to be worth in excess of $24 trillion but lay idle as fighting plagues the country.
It has seen at least four million people killed and another three million displaced.
Government forces continue to fight the rebel group M23 in the east, and recent peace talks have been suspended. Rene Abandi, leader of the M23 delegation, was quoted saying that negotiations are meaningless.
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This could jeopardize the economic foundations that have already been laid. Eustache Ouayoro, country director at the World Bank, says that over the past few years, the DRC has been able to make significant progress to restore security across most of the territory, political reconciliation and economic recovery with the support of international partners, including the World Bank. So the world waits with bated breath.
Experts look to the country’s vast untapped wealth to pave the way to economic freedom, but say the road to this is likely to be a long one. Ouayoro says that positive signs are there, albeit tentative. The DRC may be emerging from instability and taking its first steps towards a new development era.
The country’s citizens suffer from poor healthcare, limited education and poverty. According to the World Bank, the DRC ranks last among the 187 countries in the Human Development Index. Poverty is widespread, with 71% of the population living on $1.25 a day.
The DRC, however, has been making steady strides in economic growth. Inflation was under control and in single figures in 2012, compared to 500% in 2001, and the World Bank says that with economic growth of 7.2% in 2012, and 8.2% expected in 2013, the DRC is among the countries experiencing some of the fastest levels of growth in the world at a time when it is non-existent in Europe.
Debt relief has helped. DRC was granted an estimated $16 billion debt relief under the World Bank and IMF’s Heavily Indebted Poor Countries (HIPC) Initiative. The write down has helped improve the country’s fiscal position and has allowed it to invest its debt savings in to development opportunities.
The World Bank reports that only a mere 10% of the DRC’s huge tracts of arable land are farmed, and only 13,000 hectares are irrigated. The country has four million hectares, but is currently importing at least 30% of its food. The World Bank believes its land could feed a billion people.
Ouayoro says that for the country to realize its full potential, there needs to be: improvement to the business climate; progress on anti-corruption measures; economic governance and stronger government institutions. It will also have to address the large infrastructure gap and prioritize food production and agriculture.
“We must promote inclusive growth in the DRC by making its economy more irresistibly competitive and helping to spur the creation of new, well-paying jobs, especially for the country’s growing ranks of young people,” Ouayoro says.

The Poor Rich Country

Land reform has been as controversial an issue in post-colonial Africa, as it has been emotive. Not surprising given the sheer scale of poverty and inequality that countries had to deal with once they attained freedom.
The last country to be liberated, South Africa, is finding itself in this unavoidable position- having to take land from mostly white farmers and giving it to large numbers of disadvantaged. In its attempt, South Africa is haunted by the chaos and misfortunes of neighbouring Zimbabwe.
This is not a policy unique to Africa, however. Colombia is working towards an accord on land reform. Some socialist movements in China, Mexico and Cuba, as well as democratic regimes in Chile, Puerto Rico and Venezuela have gone through it.
<div id="attachment_1745" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1745" class="size-medium wp-image-1745" src="/wp-content/uploads/2017/04/John-du-Plessis-CEO-of-TSB-Sugar-200x300.jpg" alt="" width="200" height="300" />ohn du Plessis, CEO of TSB Sugar</div>
The reason South Africa’s land reform process has become urgent is the 100 year anniversary of the Natives Land Act, on June 19. The act limited black land ownership to 7%, later increased to 13%. It restricted black people from buying or occupying land, except as employees.
Between 1994 and 2011, 6.8 million hectares (ha) were transferred to claimants. This land is allocated on a 99-year leasehold. The minister of rural development and land reform, Gugile Nkwinti, said that 4,813 farms had been transferred, between 1994 and January 2013 and that his department had spent R12.9 billion ($1.43 billion) on land reform.
Political pressure is growing to speed up South Africa’s tortoise-like land reform in the face of unrest among the poor.
The reasons the land restitution progress has dragged range from corruption to government inefficiency. The bigger question is whether allocation of this land means it will be put to work. The reality is that some claimants have opted to take cash instead of title deeds. South Africa’s department of agriculture, forestry and fisheries (DAFF) and the department of rural development and land reform (DRDLR) failed to respond to questions about these issues.
The DRDLR has spent R1.8 billion ($200 million) on the redistribution and recapitalization programs and has set aside R3.2 billion ($355 million) for land reform.
This has been carried out under South Africa’s Restitution Land Rights Act of 1994, which was amended to redefine the ‘restoration of a right in land’ as ‘the return of a right in land or a portion of land dispossessed after June 19, 1913 as a result of past racially discriminatory laws or practices’.
The government is hoping to finalize the thousands of outstanding claims in the next year. The process has taken 18 years. To complicate matters further, the laws are being rewritten, which is likely to cause even more uncertainty.
The willing-buyer, willing-seller model was scrapped and in November President Jacob Zuma created a stir when he proposed that land be bought from white farmers at “just and equitable” prices. He has also suggested a land policy barring foreigners from owning land in South Africa, in favor of long-term leasing. The policy has yet to be finalized and passed, along with the auditing of privately-owned land.
A good case study of the land reform initiative is the sugar industry in Mpumalanga, in northern South Africa. The country is the world’s eleventh largest sugar producer. According to the DAFF’s February 2013 newsletter, Mpumalanga contributed almost a quarter of the national sugar production, during the 2010/2011 season. The South African sugar sector made around R8.2 billion ($910 million), the bulk of which goes to the local market. The growers get around 64% and the millers get more than 35% of the industry’s divisible proceeds.
In 1998, TSB Sugar began work with the government on land reform. TSB gave up around 90% of its land, which the company is currently in joint ventures (JVs)—with communities—over. The land used to be owned by the company, to secure its cane supply.
The company’s CEO, John du Plessis, has been in the sugar industry since he left university. He says the industry has been through tough times due to drought, land reform initiatives and pressures on margins. Du Plessis feels that land reform initiatives caused feelings of uncertainty, leading to lost efficiency in the milling sector and lost production in the agricultural sector. Pressure on margins has been caused by competition from imports, inflation and rising input costs, mainly due to electricity and fuel increases.
Du Plessis says that the biggest problem with the transference of land was high expectations by those who receive it.
“There is a huge expectation that ownership and management can be taken over, sooner rather than later, and we know that’s not a reality,” he says.
Land reform has definitely caught on in the sugar industry. Sixty seven percent of the 49,598ha in the Nkomazi cane area, in Mpumalanga, is owned by beneficiaries and 88% of this percentage is functional.
TSB and its JVs contributed 34% of the cane for the Nkomazi area during the 2012 season. The area has exceeded the national ownership target, while productivity on some of the land has increased slightly, largely due to the fact that some farms were run down. Small growers are a concern. These growers operate as sub-economic units, some producing only 35 tons per hectare against an industry norm of 100 tons per hectare. They are trying to solve the issue by forming co-operatives but this is often hindered by squabbles among owners.
“Sometimes it’s social issues that are undermining the sustainability of land reform and not production,” says Dave Thomson, the manager of land reform at TSB.
The global reality is that there are fewer farmers farming larger areas. The National Development Agency and the South African Sugar Association (SASA) raised R2.8 billion ($310.5 million) last year to improve the competiveness of small-scale sugar cane farmers.
One of the new cane farmers on the block in Mpumalanga is Petros Silinda, who used to teach agricultural science and biology in the province. He held numerous positions including commercial manager, company director and chairman of a trust. His three children are also learning the business.
Silinda believes that new farmers need to work with the old.
“There’s no chop and change in farming,” he says.
Each community in the area formed a trust in 2004, TSB has no say over how the trust manages its finances. The trust in charge of Silinda’s community’s interests has a 22-year deal with TSB, which was signed in 2008. The first 11 years are a 50-50 partnership and the next 11 will be in a 60-40 split between the trust and the company respectively. The trust represents around 1,464 households.
New political party leader, Mamphela Rampele, who was speaking at the opening of the Land Divided Conference 2013, said that there needs to be a balance between the need to redistribute land and retain existing commercial farmers.
At the sugar fields of Mpumalanga, Thompson says that trying to tinker with land prices isn’t going to speed up land reform. He thinks that government needs to look at the process and red tape. Land waiting to be transferred is in the hands of the government but who is there to manage the farms and ensure that there isn’t a dip in production before the beneficiaries receive it.
In Mpumalanga, they tell the story of how the owner of the 576ha Outeniqua farm sent government an offer to purchase the farm but the officials were slow. The farm fell into ruin as the farmer walked away. It was looted and vandalized and by the time the government made its R13 million ($1.4 million) purchase and transferred it to Silinda’s community, it was nothing but fallow land.
When Zimbabwe pushed through the Land Acquisition Act in 1992, the government was entitled to designate mainly-white commercial farms for resettlement.
Little happened until 2000, when the ruling party lost a referendum over a new constitution, that would have absolved the government of paying compensation. Bands of war veterans took the land by force, effectively paralyzing the industry. Professor Sam Moyo, from the African Institute for Agrarian Studies, feels that the downfall of the sector was due to the three droughts that occurred between 2002 and 2008, along with the economic meltdown.
The other issue is that when experienced commercial farmers leave, they take their skills with them. This was the case in Zimbabwe.
SASA is trying to make sure that doesn’t happen to its industry. What some fail to see is that having worked the land for generations is very different from being in charge of a business. If the sugar industry can embrace an adapt-or-die mentality, then there may be hope for the rest of the country. The road is long and the squabbles plenty.
Silinda’s parting words speak volumes.
“The moment you start fighting, over nothing, this business is going to perish and when it perishes, it perishes with us.”

Land And Honor

How times have changed. When I covered my first African Development Bank annual meeting nearly 20 years ago, development conversation was often dominated by apartheid—how the last bastion of white rule was impeding the progress of the continent.
Dominant, too, were the other issues frustrating African progress: political instability in the west and east; soldiers in power; corruption; poor governance; poverty etc. Back then aid flows were certainly bigger than foreign direct investment; fewer countries boasted positive real growth rates, let alone expansion at near double digits; elections were at a premium and even rarer—peaceful change in government. It was so dark that five years later The Economist magazine weighed in with its now infamous ‘Hopeless Africa’ moniker.
Now, not only do opposition parties assume power from a ruling party like they did in Zambia last year but you can count on your two hands, the number of countries where democratic elections have become the norm. According to The Economist, all but Mauritius peacefully changed a government or president at the ballot box in the three decades since independence in the 1960s. However, once Benin set the trend in 1991, it has happened more than 30 times.
“We are here to tell the world: African investment opportunities are the ‘low hanging fruit’, part of the solution to today’s global problems,” said Donald Kaberuka, the head of the African Development Bank, at the opening ceremony of the 2012 meetings.
Global consultancy McKinsey &amp; Company in its much lauded Lions on the Move research says 27 of the continent’s 30 biggest economies have been expanding at a faster pace since 2000. These days, The Economist says that between 2010 and 2011, seven of the world’s 10 fastest growing economies were African.
The reforms of the 1990s—the same ones The Economist didn’t see—are beginning to pay off. To be fair they did change tune—in December 2011, that headline had changed to ‘The Hopeful Continent’. The reforms bore fruit at a most opportune time with the rise of the dragons in the east—China and India—happening at the same time that Europe began to decline. All this, illuminated Africa’s investment credentials.
“I have no doubt in my mind that Africa is poised to become the world’s new economic powerhouse for the 21st century,” says Tanzanian president, Jakaya Kikwete. “With its endowment in both natural and human resources, the pursuit of sound economic policies, and with democracy, good governance, respect for the rule of law and human rights being entrenched, nothing will stop Africa from getting there.’’
The 2012 meetings demonstrated just how far Africa has come. It was hosted by Tanzania’s tourism capital, Arusha, at the foot of Mount Kilimanjaro. The theme was taking advantage of the here and now; ‘Africa and the Emerging Global Landscape:
Challenges and Opportunities’. Over five days, seminars, bilateral discussions and workshops discussed everything from the lessons learnt from civil wars, droughts and food security to good financial governance. Here was the evidence, if any more was needed, that Africa’s time has come. The bank’s financials themselves tell the story. While the bank was near collapse in 1995, the AfDB’s financial health is now strong. It remains Africa’s sole AAA-rated institution by all three global rating agencies—meaning it can borrow at lower costs than France, Spain and Portugal.
Last year it approved $5.66 billion in loans, grants and equity investments etc., up 42% from the prior year. But the bank’s value cannot be measured in the money it lends alone. It is an important player in building African institutional capacity and technical capacity which plays a role in fragile states and is also helping the continent to achieve food security. In short, the mandate has moved beyond the original focus on infrastructure envisaged by its founding fathers in 1963.
But caution remains a watchword for Kaberuka, who is now serving his second and last term.
“There are heavy dark clouds on the horizon—the lagged effects of the recession in Europe, the uncertainty about how the BRICs will fare in 2012, and hence the implication for investment flows and demand for our exports. Also, in 2008 when the financial crisis was at its apex, Africa was in a much stronger position to withstand the external shocks. This time round, the resilience is not as robust, the shock absorbers, the fiscal space is weaker,” says Kaberuka.
However, with projections of a near doubling of the continent’s combined GDP to $2.6 trillion by 2020, with consumer spending forecast to increase by 62% to $1.4 trillion over the same period, in key sectors like consumer products, construction, telecoms, financial services and mining; it’s hard to temper optimism that the diamond in the rough may be ready to shine.
“While Africa’s challenges are well-documented, there is an increasing recognition that the continent is on an upward trajectory; economically, politically and socially,” says Ernst &amp; Young in its 2011 Africa attractiveness survey.
From hopeless to hopeful, I wonder what The Economist’s headline will be a decade from now?

From Hopeless To Hopeful

American civil rights activist, Reverend Jesse Jackson, is no stranger to South Africa. He came to Africa many times as he led radical African-Americans against apartheid in the 1970s and 80s.
<div id="attachment_322" style="width: 211px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-322" class="wp-image-322 size-medium" src="/wp-content/uploads/2017/04/DSC_0241-201x300.jpg" alt="" width="201" height="300" />Reverend Jesse Jackson</div>
The Baptist minister, who was also a US presidential candidate in the late 1980s, landed at OR Tambo Airport in Johannesburg in January as a guest of honor for the centenary celebrations of the African National Congress. It was a South Africa very different to the one he encountered three decades ago.
“The contrast between arriving in [what was then] Jan Smuts Airport and [what is now] OR Tambo airport, that in itself is hugely impactful, beyond this generation’s imagination. Back in 1979 there were no black pilots or flight attendants. The only blacks you saw were pushing brooms, they were under great intimidation and walking around with pass books in their hands.”
In 2012, the political issues of South Africa are far from over. This time around, Jackson, who marched alongside Dr. Martin Luther King Junior in the 60s in the civil rights movement,  landed in the heat of debate over one of the great issues of Africa: nationalization.
For many months in Africa’s biggest economy, there has been argument over whether South Africa should nationalize its crown jewels like the mining industry. Radicals like suspended ANC Youth League leader, Julius Malema, who is appealing his suspension from his post as president, has called for nationalization now in the cause of helping the poor with education and employment.
Jackson says it needs to be on the ruling party’s to-do list.
“The idea is to somehow create a fairer distribution of resources. [ANC] must determine the timetable for that, but too few people own too much wealth and too many have too little. Therefore, there must be some plan for re-investment so you have a fairer distribution of drinkable water, housing, healthcare and education,” says Jackson.
When Jackson reached the ANC celebrations, South African president, Jacob Zuma, used his speech as an indication that the party may want to put the issue to bed, saying government had acquired the state’s resources and would be using them appropriately to the people.
In August 2011 Mineral Resources Minister, Susan Shabangu, said: “Foreigners will not invest in South Africa; Nationalization is a bad idea… The correct question should not be whether or not we nationalize; the question, in my view, should be: How do we make use of our vast mineral wealth to eliminate [poverty, inequality and unemployment]? Is this perhaps not a more productive debate?”
Shabangu’s comments came to the dismay of many young black, unemployed South Africans as well as activists like Jackson.
“This is government induced wealth and neglected poverty so South Africa’s having to overcome centuries of mal-distribution of opportunity. Some of your best minds were driven out the country, others were not allowed in the country. So you cannot dismiss the devastating long term, continuous resonation of the economic apartheid system. This South Africa is different today; you are now free but unequal. Freedom required the will to sacrifice, to overcome barbarity and indecency. Now the challenge is equality, which requires a different set of skills,” says Jackson.
The nationalization question will be decided in December 2012, at the ruling party’s elective conference, which will also be held in Mangaung, Bloemfontein.
For now, Jackson says, the country’s democratic progress is headed in the right direction, but there is still a lot to learn about transparency, checks and balances.
“It’s still early in the morning for the new South Africa,” he says.

Tag: poverty

FORBES AFRICA SOCIAL MEDIA

The Poor Rich Country

Land And Honor

From Hopeless To Hopeful

Caring Is Sharing, Says The Good Reverend