Entrepreneurship development for agri-transformation

In this third instalment on agriculture transformation, TAMANI NKHONO-MVULA* argues that exporting raw agricultural products can be minimised by heavily taxing it to subsidise local manufacturing. Read on:

The process of developing human resources and entrepreneurship for agriculture transformation must begin with an attitude change towards agriculture.

Malawi’s tea, tobacco and textiles enter international markets in unprocessed form

The state of Malawi’s agriculture is in my view a true reflection of the kind of attitude we have towards it. It is how we perceive it and consequently how we practice it. This is also reflected on how State funding to agriculture is arranged in the national budget as to which budget lines get the biggest or the smallest part of the resources.

The same is also manifested in the kind of approach that non-governmental organisations (NGOs) take to ‘develop’ agriculture. Most NGOs in Malawi do not bring about any change, the communities are as poor the day they leave them as they were the day they came in despite on paper having spent millions, at times they leave them poorer after creating a dependency syndrome.

The bad attitude towards agriculture is also reinforced in how it is presented in the media, in posters and even in education curriculum. Though these to some extent present the reality of Malawi agriculture but they do not serve any purpose in changing the perceptions and improve agriculture in the long run. We cannot woo the youth into sector that way.

The author: Nkhono-Mvula

Malawian children are told at a tender age to work hard in school because if they fail they will be farmers. Agriculture is presented as a profession for the failures, the poor, the illiterate and the retired. During my days in Primary school noisemakers in class were being sent to farm in the school garden as punishment. We grew up fearing and hating agriculture. We grew up thinking that a career in agriculture or being a farmer is the worst thing that can happen to an individual.

Agribusiness

Of late, there have been calls to take agriculture as a business, calling the youth and the current crop of smallholder farmers to agriculture entrepreneurship. This is a good thing, however, agriculture faces challenges even beyond the farm.

The bad perception of agriculture is also entrenched in the banks and other places where financing for agriculture and agriculture enterprise can be obtained. Most banks in Malawi offer non-agriculture friendly conditions to farmers.

One banker told me that the legal framework that governs agriculture apart from the fact that Malawi agriculture production is mostly dependent on rainfall makes their investment in the sector to be risky. He mentioned the Special Crops Act and the Control of Goods Act as some of those Acts that makes agriculture too risky. Such an environment makes agriculture entrepreneurship development especially the development of small and medium enterprises to be an uphill task.

However in the midst of all these challenges, what should we do? And what can we learn from those countries ahead of us? As the Roman Philosopher, Cicero, once said “Not to know what has been transacted in the past is to be always a child. If no use is made of the labours of the past ages, the world will always remain in the infancy of knowledge.”

Enterprise development

As we are reviewing the MGDS and the Agriculture Investment Plan, we have much to learn from our neighbouring countries who are doing relatively well in as far as agricultural production and enterprise development is concerned.

One other interesting experience, we can learn from is the Chinese ‘Spark Programme’ that was created to popularise modern technology in rural areas. Through this programme the farmers’ cooperative-led SMEs were initiated in a model called ‘township and village enterprises’, which helped in stimulating rural industrialisation throughout the country.

Thinking of this model, the One Village One Product (Ovop) scheme always comes to mind, However, the Ovop scheme, in my view, lacked a clear policy framework and strategy for its promotion. The standardisation of products leaves a lot to be desired.

The products are of poor quality and lack diversity. Most of the products produced under Ovop are not export market worthy. However, Ovop is a good idea that needs to be encouraged from the higher level and I am looking forward to the day I will enter into Shoprite and buy Margarine made by local farmers cooperative in Mbalachanda or Tomato Sauce made by a youth group from Chapananga.

Furthermore, to promote rural industrialisation, universities must lead in research in rural industrialisation technologies and the courses offered in our universities and the rural technical colleges must be tailored to promote small scale agriculture processing.

To achieve this and to further fast track the development of appropriate value chains, the government must help creating enterprises that must be operated in conjunction with the private sector.

Alternately, through Malawi Rural Development Enterprise Fund (Mardef) there should be a creation of a Rural Industrialisation Development Facility that should oversee the fast tracking of development of rural industries.

Our universities are producing graduates for white-collar jobs only and my other fear is that rural technical colleges will create a cohort of frustrated graduates if there is no deliberate provision for practice.

Additionally, on every rural growth centre, the government must facilitate the establishment of a factory to process the prevailing crops in that locality, develop strong links between these factories and the Universities and rural technical colleges.

District assemblies, as local governments, must be entrusted with the responsibility of coming up with written proposals of rural industrial development in their particular districts and be given targets for such initiatives. The proposals must identify potential opportunities in the districts. They must facilitate public-private dialogue platforms and woo private sector investments in their districts.

For instance, we need rice processing industries in Karonga, Zomba and Nsanje, a cassava processing industry in Nkhata Bay, a groundnut processing factory in Mchinji, a fruit processing factory in Mwanza, irish potato processing factory in Dedza etc.

These factories can be run for some years before being fully privatised when capacity is built and probably have them listed on stock exchange. Additionally these companies must be commissioned to assist in the development of farmer cooperatives, research and extension along their concerned value chain.

There is also need for the government to set targets and clear indicators of performance for these PPPs and must be strictly monitored. This will need an effective civil service to do the monitoring. I hope that the current public sector reforms will create institutional arrangements that will help spur a new thinking and attitude in the civil service, it will create efficient institutions that will facilitate the growth of the industry and the agriculture sector. I believe that State initiated capitalism can help to kick start agricultural industrial revolution in Malawi.

I also believe that if major donor programmes like the Farm Income Diversification Programs (Fidp), the Feed the Future and others can help in facilitating such strategic establishment and also help in having the products from these factories get to the Europian Union (EU) or USA markets, then poverty reduction will be a sure thing.

Mzuzu Coffee with the support from Fidp has proven that this is possible. It is my desire to see Malawi standing on its own soon but if donor aid will not go into strategic areas that can spur real development and overseas markets remain inaccessible; Malawi will remain an economic sickling for many years to come.

Vision and roadmap

What we need is a clear vision and roadmap for agricultural industrial development and a resolve to get out of our current situation.  This must be coupled with the development of strategic institutional arrangements and investments in strategic sectors that must support the industry.

The government must also ensure that there is a flow of bank credit to these strategic sectors and at a subsidised rate if possible. Related to the same, corruption and illegal externalisation of forex must be made a serious offence.

In countries like South Korea during their transformative years, illegal externalisation of forex was punishable by death. I am not an advocate of the death sentence but I am just pointing out how other countries took these things seriously.

On industrial development Malawi can learn from the models that were used by European countries to develop. Among others, these countries used State-owned enterprises after the World War II to process their agricultural produce and they grew impressively. This set the pace for their being industrialised nations today. Countries like South Korea, Singapore and Taiwan had until recently one of the largest State-owned enterprise sector and have been star performers and some of these countries were at par with Malawi economically at independence. I believe that strong PPP arrangements in the development of agriculture value chains can accelerate the growth of the agricultural manufacturing subsector.

Additionally, multinationals must also be encouraged to domesticate technology of their sister companies in other countries and do much local processing than exporting raw materials.

Most multinationals based in Malawi no longer process their products but are just acting as selling agents for their sister companies. The condition for multinationals to operate in Malawi must be local processing and partnerships, otherwise they are adding less value to the Malawi economy.

Processing and value addition will be lip services if such bold decisions cannot be made. However to achieve this we will need a massive corresponding investment in strategic sectors like energy, road and rail infrastructure, basic and tertiary education, security and good governance.

These investments should be done among other ways by using pension funds as was the case in some European countries. Exporting of raw agricultural products must be minimised and heavily taxed to subsidise local manufacturing. n

*Tamani Nkhono-Mvula, is a PhD student in Development Studies at University of Malawi.

 

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