24 May 2017

Zimbabwe: World Bank Ranks Zim 15th in Seed Sector

An Enabling the Business of Agriculture (EBA) study conducted by the World Bank has ranked Zimbabwe's seed sector as number 15 out of the 62 countries measured.

The report measures and monitors key elements of countries' regulatory framework that affect agribusiness value chains. It also identifies and analyses legal barriers for the business of agriculture and quantifies transaction costs of dealing with government regulations, providing indicators that can be used to benchmark the regulatory environment of different economies.

Among the twelve areas of regulation looked, Zimbabwe ranked number 20 in machinery, transport 29 and fertiliser 29. However, ICT ranked poorly at 59 and finance 49.

Zimbabwe has been included in this year's edition of EBA 2017, marking the first cycle in which the country has been included in the data set. This comes at a time when Zimbabwe is pursuing a Command Agriculture programme that has boosted the production of cereals. In terms of contract farming, the report says that among the nine countries that have adopted contract farming regulations, certain better practises were identified.

"For example, all countries but Zimbabwe explicitly require contracts to be in writing, although in Zimbabwe the obligation on buyers to submit detailed schedules of their contractual agreements to the Agricultural Marketing Authority could serve the same purpose as written contracts," says the report.

The report highlighted that written contracts can improve the clarity, completeness and enforceability of the parties' rights and obligations, adding that they also serve an important evidentiary purpose in the context of any related court proceedings. It was noted in the report that four of the nine countries with specific contract farming rules have also established special commodity or sector-specific institutions that offer alternative dispute resolution mechanisms to enforce agricultural contracts. Such tailored mechanisms were to be particularly beneficial due to the sector-specific knowledge and expertise developed by the institution.

"In Zimbabwe, the Grain and Oilseeds Technical Committee, in which private sector stakeholders are largely represented, determines any disputes arising from grain and oilseeds contracts, and its decisions can be appealed to the Agricultural Marketing Authority," said the report.

Zimbabwe was also noted to be among the only five countries that conduct tractor road worthiness testing every two years. "Of the 62 countries studied, about half make regular tractor roadworthiness testing mandatory".

However, the report also said that Zimbabwe does not have trucking regulations that ensure that certain minimum standards are met to guarantee the formality of professionalism of truck operators. A number of countries were noted to have embarked on a series of reforms to improve the qualifications of their truck operators and the quality of trucking services.

In terms of lending, the report, Zimbabwe was identified among the only seven countries that have policies requiring commercial banks to lend a percentage of their portfolio for the purposes of promoting agricultural activities. The report opined that governments should establish appropriate regulatory systems that ensure the safety and quality of agricultural goods and services without being costly or burdensome overall so as to discourage firms from entering the market.

"Excessive regulation makes firms move to the informal economy and generates high unemployment. Poorly designed regulations impose high transaction costs on firms, thus reducing trade volumes, productivity and access to finance. Creating an enabling environment for agriculture is a prerequisite to unleash the sector's potential to boost growth, reduce poverty and inequality, provide food security and deliver environmental services."

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