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Archive for May, 2011

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Dutch treat

| May 31, 2011

“The devil shits Dutchmen,” complained Sir William Batten in 1667 as he watched the English fleet burning in the Thames estuary.

The famous British naval administrator was exasperated by Dutch challenges to English rule in the east Indies, on the high seas, and now even at home.

While few would accuse the Netherlands of having an overly aggressive foreign policy today, at least part of Sir Batten’s observation continues to hold true—the Dutch are everywhere.

A new contingent of guests arrived today at York Lodge. While not all proper Dutchmen, five of my seven fellow diners were Dutch speakers—two government officials from The Hague, the Belgian diamond trader who also joined us yesterday, an American teacher who has lived in Antwerp for nine years, and an Afrikaner.

Unsurprisingly, dinner conversation focused on the idiosyncrasies of the various Dutch dialects.

The only internationally recognized Dutch word, of course, is apartheid. But none of us felt inclined to bring this to the attention of our non-Dutch-speaking table mates.

Witchcraft

| May 31, 2011

Healer or troublemaker? © Hans Hillewaert / CC-BY-SA-3.0

In addition to the rising cost of production, unclear property rights and limited access to capital, the tobacco grower I visited this morning had to deal with another challenge recently—witchcraft.

After several of his workers were killed in a car crash and others contracted mysterious illnesses, farm laborers started accusing each other of casting spells. They summoned a witchdoctor, but the ensuing spiritual cleansing ceremony got out of hand.

These rituals typically involve wild drumming and dancing and it is not uncommon for participants to lose control. Apparently, several workers started speaking in languages they do not normally speak. More disturbingly, one person was stabbed.

The witchdoctor was jailed for his role in the stabbing. Perhaps worse for him, his credentials were questioned.

The farmer says he had used lighter fluid, rather than magic, to make water burn.

In a nutshell

| May 31, 2011

Securing supplies

After visiting a commercial tobacco farm and several leaf merchants, the story that emerges is as follows:

Zimbabwe tobacco production used to be dominated by a small number of large-scale tobacco farmers. The majority of these commercial growers were white descendants of British colonists.

At independence in 1980, the Zimbabwean government announced it would purchase white-owned farms and redistribute them to landless black peasants, who account for the vast majority of Zimbabweans. The program was to be carried out on a willing-buyer-willing-seller basis, but for a variety of reasons, land redistribution didn’t happen as quickly as envisioned.

People got impatient, and when President Robert Mugabe started losing popularity by the late 1990s, he changed tack. The willing-buyer-willing-seller principle was abandoned, and commercial farmers started being evicted from their land, sometimes violently and often without compensation.

But instead of benefiting the landless masses, many properties ended up in the hands of the party bosses, police commissioners and army generals—people selected for their political connections rather than their farming skills.

As a result, Zimbabwe’s once-thriving agricultural sector—and, with it, the entire economy—came to a grinding halt. (Tobacco at one point accounted for some 30 percent of Zimbabwe’s foreign currency earnings.)

The new growers who are farming face a set of formidable challenges, including the fact that they have received no titles to their land. This means their properties cannot be used as collateral for obtaining bank loans, which is especially problematic for a crop like tobacco, which requires substantial upfront investment.

In order to secure their leaf supplies, tobacco merchants have started contracting directly with growers, providing them with capital, inputs and other necessities. In essence, they have become financial institutions, a function with a considerably different risk profile than that of their core business—buying and selling leaf tobacco—and one that many remain uncomfortable with.

Many people I’ve spoken with believe that lack of property rights and the related inability to access capital are the biggest limiting factors to further expansion of Zimbabwe’s leaf tobacco industry.

Table topics

| May 30, 2011

I had dinner with three fellow guests at York Lodge—a Belgian diamond trader, a Brazilian AIDS consultant and a member of the Danish embassy in Zambia.

The diamond trader was in Zimbabwe to help the government secure the spoils of a recently discovered field—supposedly among the largest and most easily accessible in the world—and the Danish embassy worker was helping his colleagues reopen his country’s consulate in Harare.

The Brazilian AIDS consultant described the challenge in getting patients to cooperate in their treatments.

Infected people in rural areas, she said, have discovered that a new treatment also accelerates the growth of poultry. Expensive medicines intended to fight the AIDS virus are being fed to chickens instead.

I love meeting people with different backgrounds.

Not your money’s worth

| May 30, 2011

Keep the change

I met John Robertson today, a local economist whom I have always admired for his common sense and willingness to speak truth to power.

He said the game changer in Zimbabwe has been the “dollarization” of the economy in 2009, which has restored a degree of order to the marketplace. Prior to that, hyperinflation, combined with a unrealistic official exchange rate, made it virtually impossible to conduct business—at least for reputable businessmen.

A leaf buyer told me that when he and his friends would play a round of golf, they would buy the beer they planned to drink afterward prior to the match because its price was likely to double during the game.

Quotes for services were valid for just one hour, and the banknotes could barely accommodate all the zeros. I think the last Zimbabwean dollar bill to be issued was a 100 trillion-dollar note—the equivalent of a few U.S. dollars—less toward the end of the week.

Of course there are always people who thrive in such an environment—those with debts, for example. And before the government switched to the U.S. dollar, the Harare stock market was said to be the best performing in the world.

Portugese chicken

| May 29, 2011

Pleasant dinner with my good friend Murray Prince, whom I hadn’t seen for at least eight years.

Murray gave me the skinny on tobacco and politics in Zimbabwe—none of it attributable, of course, but his primer will be helpful as I start my workweek.