Zimbabwe: Govt Urged to Liberalize Agriculture Sector

17 April 2019

Low level investment into the agriculture sector can be augmented if government liberalizes the agriculture sector and let market participants play the leading role in infrastructure development and also determine pricing, the inaugural Zimbabwe Agricultural Sector Survey Report suggests.

Zimbabwe has a favorable climate and arable land coupled with a substantial coverage of water bodies to sustain a viable agriculture sector but owing to poor investment into the sector, the country remains a net importer of agriculture related commodities.

The report shows that Treasury allocation to agriculture has not improved, in most cases receded leading to lower output.

In 2009, government extended US$ 343 million towards agriculture, and in 2017 the allocation fell to us$ 291.60 million.

African Economic Development Strategies (AEDS) chief executive officer Dr Gift Mugano, who led the research said liberalization of the sector will lure more investment into the sector.

"One of the key elements which must be taken seriously by government is to liberalize the agriculture sector. Like what we have seen in tobacco, the agriculture sector needs to be liberalized to allow players to come in and support the production of the crops, livestock on a demand and supply approach," said Dr Mugano.

Zimbabwe has a pedigree of running an opaque agricultural system, the current being command agriculture which has seen the military having a huge stake in the exercise, with Operation Maguta in 2005 also having a military element attached to it.

The tobacco industry has made a good example of a free-market based trading which has seen tobacco output make a record 252 million kgs last year making a strong case for a commodity exchange for grains.

The commodity exchange is a market for grains where pricing of agricultural commodities are determined by market forces, as opposed to government stipulated prices of grain.

"If you want to look at it from the tobacco side, you are seeing a market where there is an auction trading the commodity, and this is going to help in the unlocking of funding to agriculture sector through warehouse system," said Dr Mugano.

Under the Transitional Stabilization Program, government is yet to operationalize the commodity exchange as sector players are growing anxious.

Other countries in the region have liberalized their agricultural systems by bringing market participants on board.

Ethiopia for instance, has managed to attract market capitalization of US$ 1.5 billion to its commodity exchange which has seen orders for its commodities coming from as far as Europe and they have managed to digitalize trading online.

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