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How do rural people save and invest traditionally?

7 September 2018

From income and expenditure surveys we know quite a lot about what people earn and spend from day to day. The surveys also tell us about sources of incomes. By contrast, less information is collected on what people save or in what they invest. That seems odd. Why should we pay scant attention to assets used for future contingencies? Do we assume that many families don’t have real savings and investments, or that planning for the future is neither a priority nor a practice? Perhaps those are our presumptions about rural people who appear poor and seem to lead day-to-day subsistence lives.

Those assumptions are mistaken, but how wrong is hard to say. I am not aware of any study to have targeted directly the question of how rural families save and invest traditionally in Namibia, but here are some observations that indicate that they do much more to prepare for the future than we think.

First and most obviously, crop-growing households save food stocks, often going to great lengths to make sure that the reserves last as long as possible. Not surprisingly, stored foods are those that remain edible over long periods. Magnificent omashisha or iigandhi storage baskets were developed to help people overcome famines, some of which devastated populations in the North in the first half of the early 20th Century and before.

Second, livestock are largely used as savings and investments. This may be the case throughout Africa, especially among agro-pastoralists (see the essay on the purpose of livestock in the edition of Market Watch on the 13th of July 2018). An interesting report on financial inclusion released recently by the Namibia Statistics Agency contains useful information on the uses of livestock (the report can be downloaded from https://nsa.org.na/microdata1/index.php/catalog/32/related_materials ). However, not everyone has livestock, especially pigs, goats, sheep or cattle that have considerably greater savings value than chickens. And among those who do keep animals, the majority have few livestock. As with other kinds of wealth, livestock ownership is highly skewed in rural households. Cattle serve as long-term investments over years, smaller goats and sheep as savings over shorter periods of months, while chickens are ‘cashed-in’ to meet more frequent needs for cash.

Third, considerable security comes from social networks formed in and around extended families. Membership of a network offers degrees of access to land, livestock and help from a package of assets, capital or savings. Substantial insurance value can come from being able to draw on that package when needs arise. Families also supply land and livestock – as start-up capital – to young men when they mature, marry and start their own more nuclear families. As with food stocks and livestock, family assets vary in value, and some members have greater access to the assets than others.

For those interested in how the poor make a living and their use of credit, read Portfolios of the Poor by Daryl Collins and others. It is an enlightening book, which describes the substantial number and variety of financial instruments that poorer families use to save, as well as to lend. For those of us who are wealthy and presume to be clever, the book provides sobering perspectives on the astuteness of the poor.

There is still much to ask and learn about how Namibians save and invest. If livestock, family land and social networks clustered literally and figuratively around the ‘village’ are important investments in rural areas, how might people retain or transfer those assets when they move away to urban societies? How are new social networks created? And how do urban people re-establish access to secure assets if they move back to the village?

By John Mendelsohn

7 September 2018

Is food security more important than cash security?

A recent search in Google for the exact phrase ‘food security’ came back with a whopping 24,500,000 finds, while ‘income security’ produced a list of 1,820,000 ‘hits’. ‘Cash security’ trailed way behind with only about 284,000 items.

Very different numbers. The content of the pages at the top of the search lists was also starkly different. Sites and references concerned with food security typically focus on poor people and poor countries having enough nutrition, whereas pages on income largely deal with the certainty of having an income in the long-term. Pages on cash security, by contrast, mainly talk about thieves, safes and protecting your money. This was surprising since food, income and cash security are so related. But Google and others (Namibians included) see them worlds apart: cash security troubles those who have much cash; food security is a concern for the poor who have little food; and income security is about long-term needs for an income, such as a pension.

And so it is with so many perspectives, policies and development programmes in Namibia. Much focus is on food security. That is what the poor need, and that is what they will get: in food packages, seeds, fertilisers, implements, farming training, baskets and pots. Come what may, self-sufficient food security is the goal. Rural people are even persuaded that food security can be achieved in places where it is impossible to grow food economically or sustainably. Much of this perpetuates and promotes poverty.

Even customary land rights – if people are lucky enough to have them in communal areas – forbid the use of land for commercial purposes. Instead, land held for customary occupation may only be used for residential and domestic food production purposes. To be fair, it is possible for rural residents in communal areas to have leasehold rights which could be used for commercial purposes. But then again, these are never offered as an option because the Ministry of Land Reform assumes that residents don’t need commercial rights. This has been the attitude and practice for 16 years since the introduction of the Communal Land Reform Act in 2002. Again, how much of this perpetuates, if not promotes, poverty?

We are also reminded that there is no point in giving the poor cash because we believe they don’t really need to buy much. ‘The poor are simple, ignorant people who need food and little else. Besides, any money they get is spent on alcohol. They don’t know any better.’ It is on the basis of these sorts of attitudes that the Namibian government dismissed proposals for a Basic Income Grant (BIG) years ago, and now has food packages handed out by the Ministry of Poverty Alleviation & Social Welfare in an attempt to reduce poverty. Sincerely, however, Namibia does a great job in providing social grants to the elderly, orphans and disabled. In that, there is much to rejoice.

In another blast of prejudice, we believe that rural residents in communal areas don’t need to use land as investments. They live in 38% of Namibia’s homes. How often do we hear the nuanced comment that such simple people really live day-to-day? They don’t need to, or can’t plan ahead we are told! For that reason, communal land need not be traded and therefore has no investment value. The same is true for the quarter (26%) of Namibian families who live, but can’t own land in informal settlements. But recall that livestock have long served the need for investments, capital and savings by people in Africa. That continues today in the keeping of millions of cattle, goats, sheep and poultry by non-farmers living in Windhoek and other towns.

What evidence do we have that the poor are stupid, irresponsible and with no need for long-term capital? On what evidence do we assume that day-to-day nutrition is their most pressing need? Why can’t people have the options that cash provides: to buy food, or medicine, or blankets, or taxi fares to a hospital, or cell phone credit to telephone for a job or advice from an uncle? Most modern necessities are as important to the poor as they are to the rich, especially in being able to get ahead: find a job, be mobile, look presentable, find a spouse, have children and to communicate with family and friends who provide social capital or support.

Namibian society is moving rapidly from a rural, subsistence environment to one based on incomes and consumerism in urban environments. Nutrition is needed, but so are cash incomes, and more so in towns. Unlike food security, cash security provides options for both: to buy food and other necessities of life. Options available to different groups during apartheid were not equal because it was then believed that some people were better than others. That was bad! But the same belief has guided many perspectives, policies and programmes in the same vein for the last 28 years.

Namibia should ensure that different socio-economic classes have the same options. That would be good!

By John Mendelsohn
31 August 2018

Should tenure systems still govern land uses, or vice versa?

 

The much-awaited 2nd land conference is 6 weeks away. Lots is being alleged, assumed and demanded during dozens of meetings and consultations, often accompanied by considerable hype. Despite all this talk and energy, the debate about land remains narrow, focusing largely on land as a political football. Those who score most goals will fill their political bellies with more free, idle farms. Those who lose will continue to be destitute and forgotten. A few thousand families will be winners, but hundreds of thousands will be losers if the debate continues on its present course.

Redistribution and restitution are extremely important challenges to which solutions must be found. The solutions need to be practical, and much more pragmatism will be achieved if Namibia begins to focus on the uses and values of land, rather than the kind of tenure or ownership applied to land.

Land policy in Namibia has largely been structured so that tenure arrangements are determined first. Land uses come second, thus having to fit in with tenure stipulations. As a result, tenure systems have been established in many areas of the country regardless of what land uses are desirable, or indeed possible. The nature of ownership or occupation of land has become more important than the purpose or use of land.

Much poverty has been caused as a result. The best example – and with the greatest impact – is in communal areas where about 38% of all Namibian homes are found (a percentage based on extrapolations using the 2016 Inter-Censal Demographic Survey and 2011 Population Census). Most of those households have been offered or given customary land rights (but not in Kavango East and Kavango West). The Communal Land Reform Act of 2003 first set a limit of 20 hectares (which was later raised to 50 hectares) for each customary land right parcel. However, in areas where crops can be grown population densities are so high that most residents have only a few hectares, largely of soil with minimal fertility.

The same legal tenure conditions apply in other areas mainly or entirely used for farming livestock. Each resident normally has a tiny plot, large enough for a residence, a kraal and perhaps a small vegetable garden. There is no point in having more land around your house, and also no sense in having 20 or 50 hectares because cattle herds or flocks of goats or sheep require hundreds, if not thousands of hectares of forage.

The Communal Land Reform Act of 2003 allows only two land uses on parcels registered as customary land rights: residential purposes and crop growth. No commercial uses are allowed, and the land may not be sold. Customary land right parcels therefore cannot provide incomes or investment values. These restrictions follow the perverse, pervasive prejudices that food stuffs are the only consumables that rural people need, and that these ‘simple people’ have no need to invest for the future.

Tenure conditions for commonages are left under the control of traditional authorities who are not accountable to local residents who use – or should be able to use – commonage resources. The freedom and authority that the Communal Land Reform Act gives traditional authorities allows them to expropriate or facilitate the appropriation of very large areas of commonage. For example, more than half the communal land in Kavango West and East has been expropriated and allocated to a few hundred influential families, many of them from other regions.

Namibians in other areas are also constrained by inappropriate tenure systems. For example, resettlement farms can’t be owned by their occupants. Onerous requirements for tenure and planning regulations in urban areas prevent more than a quarter of all Namibian families from having small plots on which to build their homes and invest in their futures. These are people now crowded into informal settlements. Their numbers will grow so that shacks become the predominant form of Namibian housing in 2025 if major changes to tenure policy and practice are not made soon.

These are the bizarre tenure arrangements that bedevil the livelihoods of the majority of Namibians, now to poor and polite to complain. Even the State’s honourable intentions for communal land to be used as a safety net for the poor are undermined by the tenure system that facilitates abuse by traditional authorities.

Perhaps it is not too late to ask those who lead the land conference to focus more on the livelihoods of the majority, less on the wealth of the few. Place emphasis on the use of land, not who owns it. Maximize the economic value of Namibian land, rather than using it as a political football to exaggerate differences between the ruling elite and the lower class, leaving the distribution and use of land more broken than ever! In the words of the late Kofi Annan, delegates to the land conference would do well to acknowledge ‘that suffering anywhere concerns people everywhere’. Indeed, Mr Annan’s words would do well as a slogan for Namibia’s 2nd Land Conference.

24 August 2018

By: John Mendelsohn

 

 

Why is Namibia changing rapidly from a rural to an urban society?

Namibia is changing rapidly, from a society centred very largely on rural livelihoods to one based on urban jobs and homes. The dimensions of the change are substantial, and the questions are many. What drives rural people to towns? Why is cash security becoming more important than food security? Why are small nuclear families replacing traditional extended family networks? Why do people forsake the multiple ownership of village land and capital for individual ownership of properties?

In the early 1900s, about 10% of all Namibians lived in towns. That percentage had grown to 25% by 1981, and to 32% in 1991, one year after independence. Since then, urban populations have skyrocketed further: in 2016, 48% of all people and 55% of households were in towns, according to the results of the most recent Inter-Censal Demographic Survey.

Yet, few of us seem to understand fully why these changes are happening. And many deny the extent or permanence of the changes. Migration is seen to be a mistake, especially when apparently serene rural settings are compared with the squalor in informal settlements. Some leaders have even suggested the need to reinstate influx control, or the need for the poor to be returned to rural areas. Much of this ignorance and denial comes from class prejudice.

There is now a real need for Namibia to grasp the push and pull between rural and urban life. It is not going away. The sooner there is a clear understanding of the changes the better. Several challenges in rural areas push people towards an urban life, while other advantages pull people towards it.

Let’s start with circumstances in rural areas. Namibia has very little arable soil, let alone soil that is properly fertile. About half the country is covered in sterile, wind-blown sand, while much of the rest consists of extremely shallow soils overlying solid rock. Our climate is also largely against farming, mainly as a result of high rates of evaporation, low rainfall and its irregular, unreliable nature.

As a result of our poor soils and hard climate, yields of rain-fed crops are the lowest in Africa (see https://datamarket.com/data/set/1noc/millet-yield-kg-per-hectare). It simply doesn’t make sense for a farmer to invest in fertilisers and costly inputs if the risk of harvest failure is high. In good years, small-holder farmers store any surpluses as savings in case future harvests fail. Crop produce is therefore generally not for sale. Small-scale farming like that in Namibia is characterised by risk aversion and prudence, adaptations quite opposite from those in farming systems that maximise production for commercial gain.

Livestock farming is also tricky. Again, our soil and climate work against us. Large areas are needed to support economically viable numbers of cattle, goats or sheep. Moreover, most livestock are kept as savings, security or investments, as will be explained in the next article. These animals are not for regular sale and do not contribute to their owners’ incomes. Relatively few people can therefore be supported by livestock farming or keeping.

As a product of all these constraints, most rural people have and almost certainly always will have few means to earn any incomes, let alone ones that provide for the necessities of the 21st Century. Rural homes may be food secure, but cash security and the type of life that can be lived with money is often a distant dream.

Access to above-average education, health and other public services is also limited in rural areas. Facilities may be present, but most professional and dedicated public servants prefer to live in towns. Towns offer better services, jobs, careers and business opportunities. Town folk have comforts that are normally impossible to have in rural areas, and they have figurative and literal connections to the rest of the world. These are the pull factors of urban life – a better life, where there is money to be made (including money to send home for family members who remain ‘in the village’).

The various circumstances that cause people to leave their rural homes and build new lives in towns are not going to change soon. Indeed, they will be fuelled by our growing compulsion for the consumption of bought goods, and they may be exacerbated by changes in climate.

These circumstances also provide perspectives on how long people will be in towns; under what conditions they wish to, or should live; and what sort of property rights they should be able to acquire.

There is also no doubt that urbanisation offers the rural poor their best escape from poverty. The sooner our cities and towns are prepared to welcome our rural compatriots the better.

By: John Mendelsohn, published on 29 June 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.

Why do so many Namibians have to live in urban shacks?

Namibia had roughly 10,500 urban shacks in 1991. By the end of 2018, there will be about 150,000 of them, with approximately 15,000 shacks being added each year. At that rate of growth, there will be more urban shacks than all formal urban houses and all rural houses by 2025. That is just eight years from now.

This enormous growth is due to the influx of urban migrants, but migration itself isn’t a problem. Nor should it be thought of as one. The problem is rather that central and local government have done little to accommodate people moving to towns. Since independence government and NGO housing programmes have only managed to provide an average of 1,100 plots of land in towns per year (some of these have included houses). This is less than 8% of the average annual growth of urban shacks. Why has so little been done to accommodate urban migration?

At least part of the failure to act stems from assumptions and ignorance about a variety of aspects of land, housing and society. First, much of our thinking about housing is clouded by misunderstandings on why rural people move to town. We are surprised by the scale of urban migration, often assuming that migrants would be better off staying ‘at home’ in rural areas.

Much of this thinking is driven by a poor understanding of the limited productivity of Namibia’s rural environment, and just how hard it is to eke out a living from farm produce. Food self-sufficiency may sometimes be possible in communal areas, but cash needs must be met from off-farm sources, such as pensions, local retail business and remittances. This is why most people move to towns to make a better living for themselves and to send money home to family members who remain ‘in the village’. Needs for cash incomes are also underestimated. Clothes, modern medicines, access to transport services, mobile phones, cosmetics, et cetera all require cash. All Namibians now compete in this cash-based consumer society but living rurally makes this near impossible. Small wonder that urban life is increasingly attractive, as discussed in the essay published in this column on the 30th of June.

To the misconceptions that rural life is attractive to the poor, have been added assumptions by our political leadership that Namibia’s economy and future is rooted in agriculture. Much development policy has thus fixated on rural development and farm production, leaving very little on job creation or on urban development. Namibia would gain much if our politicians understood soil fertility, crop yields, carrying capacity, drought, input costs, market access or other factors that affect the productive potential of rural areas.

Second is the problem of prejudice. We who are privileged are unsettled by the many lower class arrivals from communal areas. We fear more crime, poverty, social unrest, environmental degradation and littering. We are told these people don’t belong in towns, that they are simple people, with negligible needs for income or cash security. Racial divides have been replaced by class divisions, which are flagrantly demonstrated by the contrasts between informal and formal housing areas in many Namibian towns.

Third, many observers have almost no idea of the scale of migration and the expansion of shacks. Demand for housing is often said to have outstripped its supply, implying that demand has grown in some unnatural, unexpected way. And so demand is cast as the antisocial problem, a view strengthened by our discomfort with demand being driven by lower class migrants from communal areas. If there were less prejudice and more understanding of the reasons for urbanisation, much more would be done to increase the supply of properties.

Fourth, our knowledge of life in informal settlements is limited and we often make negative assumptions about their nature. On the one hand, there is much to dismay us, but there is also much to appreciate. Here is energy, enterprise and spirit of community often quite lacking in formal urban areas. It is also fallacy to assume that poverty and environmental degradation in informal settlements is greater than in rural areas. The difference is that squalor is concentrated and visible in informal settlements, whereas it is dispersed and harder to recognise in impoverished rural areas. Rural environmental degradation is also easier on the eye, for instance when we focus on fields of green crops but fail to note that fields have been cleared by deforesting natural areas.

Fifth, local authorities deliberately limit the supply of land that would be affordable to most urban migrants because larger profits can be generated by regulating the supply of land. Thus, priority is given to selling land for middle to lower income housing. This is also much more profitable to the land and housing developers and others who obtain lucrative commissions and kick-backs from the developments. Most poor shack-dwellers have therefore been left landless. In a less profiteering environment, local authorities could instead provide land first and services later, thus giving people a formal base from where they can begin to be an active part of the formal economy.

Sixth – and finally – discussion is concentrated of the problem of housing and migration. That there are challenges is obvious, but migration should be viewed positively – particularly in Namibia. It provides opportunities to reduce poverty, to foster entrepreneurship and small businesses, to provide better services more efficiently to higher congregations of people, and to provide property which brings investment openings, security, confidence and better access to collateral. When people own property, they become home owners, and they also become new tax and rate payers. In short, urban areas offer Namibia the best chances of reducing her poverty and growing her wealth.

Urban migrants vote with their feet, and hundreds of thousands have cast their votes over the years. Many more are coming. Perhaps we should listen and respond to the voters who will soon otherwise occupy more shacks than other houses in our democracy!

 

By: John Mendelsohn, published on 10 August 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.

What is the purpose of property rights?

Two types of property rights govern the land on which most Namibian families live: customary land rights and freehold rights. Customary land rights confirm traditional and/or historical entitlements to occupy the land which occupants may use for residential and crop growing purposes. Commercial uses are not allowed, and the land rights may not be sold. These rights are believed to be appropriate for families in communal areas.

Freehold rights confirm ownership of land which may be used for a variety of commercial and other purposes, although special permissions may be needed for particular uses in certain areas. The land may be bought and sold, and is therefore an investment. Freehold rights are regarded to be appropriate for private property in urban areas and for surveyed land that is not communal.

Clearly, Namibia has double-standards: one tenure system allows and facilitates the use of land to generate wealth, the other not. Divisions between the two were based on race before independence, now they are used to separate the classes. Not surprisingly, lots has been written and argued about the comparative merits of the two systems. Most discussion is about the trad-ability and collateral value of communal land. Supporters of the status quo offer a range of ideas on why communal land should not be traded, and on why collateral is inappropriate or unnecessary in communal areas. Their arguments favouring customary land rights are intense, but weak in defending the role of customary land rights in maintaining poverty.

The fixation on collateral as the only value of tradable rights bedevils these debates, because other benefits get ignored. But first a few comments on loans and collateral. Financial institutions need a range of validations before lending money. Most critical is the simple ability of the borrower to repay a loan, which is assessed from such qualities as the potential borrower’s employment record, earnings, age, health and even life insurance. These are important measures of the chances of a financial institution getting its money back. Having property as collateral can be useful, but other assets are of greater value.

What about those other benefits of being able to buy and sell land? Number 1 is the use of land as investments to produce wealth. By definition, any item only has investment value if it can be sold. How much of the wealth in Namibia has been generated by buying and selling land? We don’t know, but it is considerable, and many families are better-off as a result. Recall that cattle and other livestock in communal areas are used as investments, so the value of investments has been clear to everyone for a long time.

Second are the options that come from having freehold land. For example, it is easier to fund special ventures or needs by selling all or part of a property, or by using the land to help raise a loan. Expensive medical treatment or higher education for a child becomes affordable, and enterprises are easier to start, for example.

Third, fixed property provides an address, a place on a street map where owners are traceable, and a place that provides credentials. These are measures of status, which are hard to provide to land with customary rights. Fourth – and as a consequence of third point – tenured, registered properties are likely to have better access to public services than others.

Fifth, freehold titles are more secure, both in real and perceived terms than other land rights. The chances of dispossession are therefore lower than for other properties. Sixth, secure freehold properties provide their owners with confidence, a sense of permanence and greater options to plan for the future.

Seventh, owners of freehold title can decide, and be certain of who inherits their property. Traditional authorities and/or other members of the deceased’s family determine how customary estates are inherited, by contrast.

So there are seven more reasons. Together with the value of collateral, that makes 8 benefits. Each has its own merits, but it is the combination of values that offer create options, confidence and security. In turn, they raise levels of social and economic well-being, and convert houses into homes. In that, there is much to gain.

And now recall (from the article in this column on 6 July) that two-thirds of all Namibian families can’t enjoy the benefits of property rights! That is deplorable. Furthermore, those who decide that poor people in communal areas or informal settlements should not own land are largely freehold landowners. That is remarkable. In effect, those who have, know what’s best for those who have not! Or perhaps those of us who are wealthy assume that the poor can’t use property to improve their lives.

By: John Mendelsohn, published on 10 August 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein

What is the purpose of livestock in Namibia?

It is established fact, indeed dogma, that Namibian livestock are used to produce meat, as well as some milk, skins, eggs, draught power and manure. The animals are farmed for production. They or their products are harvested regularly and sold to earn revenue.  This is generally thought to be the true function of all livestock. Government, its agencies and foreign development organisations often repeat this assumption.

But this is not true for most Namibian cattle and goats, and probably not for most pigs and chickens. As a rule, these animals are neither sold nor slaughtered regularly, and do not provide their owners with steady revenue or income. They are not used for production. Instead, they are kept as investments (akin to savings, security or capital) by most livestock owners across northern Namibia, and in other communal areas. This also holds for many resettlement and freehold farms operated by weekend farmers, both from former and current times. And it seems to be the case throughout most of Africa.

Livestock ownership is thus divided into ‘farming’ and ‘keeping’. ‘Farming’ generates income and ‘keeping’ produces capital. Divisions between the two may blur, for example when market opportunities encourage ‘keepers’ to sell, or when ‘farmers’ gain other incomes and then become ‘keepers’. Most, but by no means all commercial farms are used for farming, while keeping predominates in communal areas. There are some notable exceptions, for instance in the substantial marketing of goats in former Namaland and cattle in former Hereroland.

There are subtle, but important differences between livestock savings and investments. For poorer residents in communal areas, livestock are mostly savings which are drawn when needs arise for additional income. The needs are often unexpected and pressing. Small amounts are ‘withdrawn’ by selling one or two chickens, while bigger amounts are obtained by selling two goats or one cow, for example.

By contrast, wealthy livestock owners from Windhoek, Walvis Bay, Rundu, Oranjemund, Oshakati and other towns keep livestock largely as investments. Their main purpose is to provide longer term capital security for themselves and their children. However, animals are also ‘withdrawn’ when needs arise for extra money, which includes giving animals or cash for weddings or other special occasions. The needs of wealthier livestock owners can generally be predicted more easily and they are less critical than those of poorer livestock owners.

The balance between ‘farming’ and ‘keeping’ livestock may be changing, but it is not always clear in which direction. On the one hand, younger livestock owners in communal areas increasingly produce and sell animals, as is expected from farmers generally. On the flipside, increasing numbers of cattle (and often goats) are kept as capital on communal land by wealthy urban residents.

The latter makes for great investments because the land, grazing and water are all free, and labour costs are low.  Today, more livestock on communal land are without any doubt owned by non-residents than by those who actually live in communal areas. This has extreme implications, both environmental and social. Many areas are now over-stocked, and the small herds that belong to resident families barely manage to compete for the forage and water that remains for their use. These are communal families who lack substantial incomes and for whom livestock savings are vital ‘piggy banks’ to be accessed in times of real need.

These circumstances force us to ask ‘What should Namibian land be used for?’ As safety nets for the poor, as productive land for agriculture and tourism, or as investments for rich people? Sensible answers supported are needed to these questions. And then their implementation needs to be bolstered by serious political will.

Finally, claims that livestock in northern Namibia would be farmed if the veterinary cordon fence was removed ignore the very purpose of most livestock. Getting rid of the ‘red-line’ would have several benefits, buts more might be achieved if investment options for wealthy urban livestock keepers were increased in other fields.

 

By: John Mendelsohn, published on 13 July 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.

 

Capital or revenue: the use of land by wealthy, urban livestock owners

There has been a major change in the distribution and purpose of most Namibian cattle over the last 20 years. Previously, the majority of cattle were on so-called commercial freehold farms where they were used largely to produce beef. Nowadays, most Namibian cattle are in areas we call communal where they are used mainly as investments or savings. Commercially farmed beef on the other hand produces incomes for farmers and public tax revenues.

Cattle have increased at an enormous rate, especially in the northern communal areas. For example, between 2008 and 2015, the number of cattle increased by 5% in Zambesi, 54% in Kavango East and West, 69% in Ohangwena, 30% in the communal areas of Oshikoto, 51% in Oshana and by 19% in Omusati. The annual rate of growth in these areas combined was equivalent to numbers doubling over 11 years.

Most cattle added recently to communal areas belong to wealthy men who live and work elsewhere in towns and cities. Some of the animals are grazed and watered around cattle posts in open, free-range areas, such as the ombuga grasslands in central Oshana, and many others are kept on fenced farms, some of them surveyed and allocated before 1990. But the majority of farms were acquired after 1990 through appropriation or expropriation. Some resettlement and commercial farm owners use a system of dual grazing to maximise forage for their herds. Each autumn cattle are moved into communal areas until the grazing has been depleted, after which they return to grazing preserved on the private, fenced farms of their owners. Similarly, many Namibian urban cattle owners have placed large herds of cattle in the Oshimolo ohambo area of Angola.

Some owners farm their cattle productively on communal land, earning regular incomes from sales, mostly of young weaners, tollies and oxen. However, the great majority of cattle are investments, started and expanded as and when their owners have money to buy stock. The returns and security provided by cattle are higher than those from banks, unit trusts and insurance companies, making cattle perfect investments for people living in town who can get communal land, grazing and water for free.

What are the impacts of so many wealthy urban men keeping hundreds of thousands of cattle in communal areas? Much of the land now occupied by the urban owners of large cattle herds was acquired by evicting resident small-holders or day-to-day users of commonage in these areas, normally by or with the agreement of traditional authorities and with no compensation. Some poorer local residents remain in certain areas where their small herds and flocks compete for land, grazing and water with the large numbers belonging to wealthy livestock owners. Cattle and goats belonging to less fortunate residents also serve as sources of money, which are often to meet more pressing needs than the more affluent wants of urban owners.

These circumstances contravene both the law and spirit of our Constitution.  Article 17 (1) of the Communal Land Reform Act of 2002 states “….all communal land areas vest in the State in trust for the benefit of the traditional communities residing in those areas and for the purpose of promoting the economic and social development of the people of Namibia, in particular the landless and those with insufficient access to land who are not in formal employment or engaged in non-agriculture business activities.” In short, communal land was intended to be a safety net for poorer people. A reading of Namibia’s Constitution suggests that the state has ‘a duty to administer the communal lands for the benefit of the native population that lives there’.[1]

Cattle ownership and access to land is thus an uneven playing field, one in which the rich and powerful have gotten much by appropriating resources that were set aside for the poor. And while thinking of the land that was taken away, reflect too on the lives shortened by the loss of means to survive.

My emphasis on communal land is because this is a relatively recent and massive change in the use and occupation of land intended for less fortunate Namibians. But the use and keeping of land and livestock as capital is also a feature of commercial farmland, and has been for many decades. The land owners are often known as weekend farmers or absentee landowners. They were typically white, but many black people now use their farms in the same way, irrespective if the farms were bought, subsidised with affirmative loans or given free as resettlement farms.

If we add communal and commercial areas together, probably more than a third of the farmland and over half the livestock is held as capital by wealthy people who live in towns and make their living from non-farming enterprises. Both the land and livestock are largely dormant investments because only rarely is the capital used to generate new sources of revenue for the economy.

Finally, here are two questions to challenge delegates to the 2nd land conference. First, should Namibia accept the realities of land reform in communal areas and abandon provisions of the Constitution and Article 17 (1) of the Communal Land Reform Act of 2002 that protect communal land and poorer Namibians? Second, are Namibians so wealthy and replete with other sources of revenue that so much of its agricultural land and livestock can be set aside as dead capital?

 

[1] Harring, S.L. 1996 ‘The Constitution of Namibia and the ‘rights and freedoms’ guaranteed communal land holders: resolving the inconsistency between Article 16, Article 100, and Schedule 5’. South African Journal of Human Rights 12: 469.

 

By: John Mendelsohn, published on 17 August 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.

Most Namibian families can not own land!

Sixty-four percent or two out of three Namibian families can not own the land on which they live. The figure of 64% is based on data collected during the 2016 Inter-Censal Demographic Survey and 2011 Population & Housing Census.  Thirty-eight percent of these families live in communal areas where the law forbids the ownership of land. The other 26% are in urban informal settlements where local authorities seldom make land available which is affordable to lower income groups. These families therefore occupy land that belongs to local authorities, while those in communal areas occupy land that de facto belongs to traditional authorities.

What are the impacts on families unable to own land?  How is the economy of Namibia affected by these laws and regulations? Before considering those questions it is useful to note that the legal and governance procedures which prevent land ownership in communal areas and towns were adopted after independence, and that they generally benefit the upper class. By 2018 the total number of families not able to own land will have risen to about 371,000, about 60 times more than all the commercial farms in Namibia. The scale of the problem thus goes way beyond questions of land distribution. Moreover, this is a matter of ownership and not access.

Major beneficiaries of the status quo are traditional authorities who can dispossess families of the land they occupy, sell and lease properties, and donate land to political patrons. In urban areas, local authorities limit the supply of residential land. This inflates prices so much that only relatively expensive housing and services can be developed. That provides handsome profits to property developers and their allies.

Returning to the question of impacts, families that can’t own property lack access to a combination of benefits. These are significant. Property can be used as a long-term investment in its own right, and to create short-term options that are not easily available to people without investments. Ownership provides a fixed address, credentials, greater permanence of tenure and the confidence to build a future and a home (as opposed to a house), it provides greater access to services as well as to collateral. Aspects of these benefits will be described in a forthcoming essay on property rights.

Increased property ownership would benefit Namibia’s economy in several ways. Public revenue would increase because more property owners would be available to pay rates and taxes, and property addresses will increase the tractability of defaulters. Investments in property would grow the overall wealth base of Namibia, thus creating more taxable revenue and capital. The opportunities to invest in properties would reduce spending on luxury imports and reduce the flow of revenue leaving Namibia. Imagine a family that owns a house on a small plot. Any surplus income could be saved and invested in the house: to add an extra room, give the house a coat of paint, fix a leaking roof, or to pay off more on a mortgage. The family gains a potential return on every dollar thus spent, unlike disposing of the same dollar on an imported car, or sunglasses or shoes.

Surely the time is right and ripe for Namibians to replace the discriminatory conditions that preclude many people from land ownership with ones that allow every family the choice of owning land or not. And if families so choose, they must be able to stay in their present physical and social environment.

The key is choice, creating options and allowing opportunities now closed to most Namibian families. These are needed increasingly as society evolves from a predominant focus on communal networks and customary leadership to socio-economic conditions in which nuclear families and accountable governance prevail. Besides, it is morally right for all Namibians to enjoy equal opportunities.

By: John Mendelsohn, published on 6 July 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.

 

Crop farming on communal land: maximising production or minimising risk?

A fascinating thing about most livestock in communal areas is that they are not used for production, contrary to what western society expects (see the essay published in this column on 13 June). What about crops? What rules do crop farmers follow in communal areas?

Agronomists generally assume that farmers seek to maximise production, which only works if the value of production exceeds the costs. The greater the value of the produce, the more can be spent or invested in growing the crop. Farmers can work hard, invest in machinery, improved seeds, fertilisers, and expensive labour all in the knowledge that the benefits of doing so will be repaid.

Environments where farmers can be confident that production values will exceed costs are those which have access to markets and fairly stable prices, where weather conditions vary little and/or predictably, soils are fertile, and where the costs of inputs are bearable. This is where farming can be a business, and one that provides a regular decent income.

Those conditions are rare in Namibia, however. In most areas the soils are poor, lacking nutrients, organic matter, and capacity to hold much water. Climatic conditions are also harsh, due to combinations of high evaporation rates, irregular and often low rainfall, and sporadic scorching heat. Even the hardiest crops often struggle in these conditions. Pests may also decimate crops, and most markets are small and some distance from farmers.

It goes without saying then, that Namibian crop farmers can’t be confident of producing good harvests, a point reinforced by small-holder farmers in Namibia having the lowest yields of their staple pearl millet in Africa! Often Namibian farmers can’t be sure of having any harvest! Crop failures may happen in one season, and even the next.

Under these circumstances, only one strategy makes sense: prudence. Translated into economic language, this means minimising losses and avoiding risk. It also means that surpluses are to be stored and used to supply staple nutrition for as long as possible. Surplus harvests are therefore seldom sold, given the possibility that there may be nothing to reap next season.

This kind of farming is best described as a low input – low output system. Expert ‘non-farmers’ often deplore these low inputs, noting that dry-land farming is shabby, lacking in effort. It’s not serious, as we often say in Namibia. We judge that farmers could work harder, and increase production if their skills and inputs were better. In other words, the problem is with the farmers.

Not so! Households in parts of Angola have two farming systems (similar twin strategies might be found on a smaller scale along the Okavango, Zambezi and Kwando Rivers and Olushandja Dam in Namibia). One is on dryland fields and works in just the same way as low input – low output farming in Namibia. The staples are pearl millet, maize, sorghum and manioc, all crops that can be stored over many months.

However, the very same farmers in the same households also grow crops in wet, peaty soils along small streams and seepages. The fields are called nacas on which a variety of vegetables (onions, potatoes, carrots, garlic, peppers, tomatoes, lettuce et cetera), green maize and sugar cane are the main crops. All are durable and most of each day’s harvest is sold immediately in nearby markets to produce regular, daily cash incomes. Very little from the nacas is eaten at home. Farmers are in their fields every day, working seriously as they plough, plant and weed, control soil moisture by adjusting drainage channels and harvest whatever is ripe that day. This is impressive high input – high-output farming.

So the same farmers employ quite different strategies: one risky, producing modest, erratic returns; the other more dependable delivering high value products that generate immediate cash returns (which, incidentally and obviously, can be used to buy and supplement food security). Production incentives are significant and predictable for one strategy, much less so for the other; and inputs and outputs vary accordingly.

Such differences in inputs and outputs – and in costs and returns – ought to be evaluated when we make judgements about the potential for small-holder farming in Namibia. One way of doing so is to start to probe these three possibilities: would a farm system be benefit most by improving the expertise of farmers, or by increasing inputs, or by boosting incentives?

 

By: John Mendelsohn, published on 27 July 2018 in the Market Watch of the Namibian Sun, Allgemeine Zeitung and Republikein.