For most of the last 100 years or so, Malawi, a small and poor country in the heart of Africa, has been hooked on tobacco production and exports, which continue to generate more than 50% of foreign exchange earnings. For many decades the country’s green gold was mainly grown by estates—large production units on leasehold or freehold land. In the last 30 years or so, smallholders on customary land have become the main tobacco producers in the country. But despite the fact that smallholders responded so enthusiastically to the opportunity to grow their country’s main export crop, the influence of this considerable shift in the structure of the rural economy has been limited in terms of both poverty reduction and transformation in the country.
In 1996, 57.7% of sub-Saharan Africa’s population lived in poverty (measured using the $1.90 poverty line based on 2011 purchasing power parity conversion factors). At this time Malawi had a broadly similar percentage of poor people as sub-Saharan Africa as a whole: 63.6% of Malawians lived in poverty two years after the shift from authoritarian rule to democratic forms of governance. By 2010 sub-Saharan Africa as a whole had made some progress in reducing poverty (as a proportion of the population, but not in absolute numbers of people due to population growth). Using the same poverty line, in 2010, 45.7% of those living in sub-Saharan Africa lived in poverty. But in Malawi in 2010, 71% of the population lived in poverty (using the same poverty measure). So, while much of sub-Saharan Africa has had some success in reducing poverty rates in the last two decades or so, Malawi has been stuttering and now appears to be stagnating without a clear path for the economy and citizens. Similarly, the shoots of transformation visible in Malawi’s agrarian neighbours and peers are absent in the sandy soils of the Kasungu plain or the dark soils of the Shire Valley.
There are, of course, many reasons for this in addition to changes in the production and marketing of the country’s main commodity. The burden of HIV/AIDS, the high transportation costs this small, landlocked country endures and, last but certainly not least, and a lack of leadership have all hindered progress. This book examines the stagnation of Malawi in the previous three decades through the lens of the main industry in the country—tobacco. In doing so, it highlights themes and processes which are characteristics of countries on the continent that, even in the twenty-first century, rely on a single or limited number of agricultural commodities for a considerable proportion of their hard currency. Groundnuts remain a key industry in the Gambia, as is cocoa in Cote D’Ivoire, sugar in Swaziland, coffee in Uganda, cocoa in Sao Tome and Principe, and coffee in Ethiopia; tobacco has boomed once again in Zimbabwe and coffee remains important in Burundi.
This is not to say that the experience of Malawi over the last three decades can be uncritically extrapolated to other countries. Far from it. Each industry and country has its own set of actors, institutional frameworks, geographies and last but not least histories which all influence the extent to which a dominant commodity benefits the country and its citizens. However, the themes and processes highlighted here resonate with the experiences of other countries in the region and continent. Three broad points illustrate this clearly.
The first point here is that when African elites reform institutional frameworks to allow smallholders a reasonable opportunity to supply the dominant agricultural commodity, smallholders do so prolifically, creating employment and positive multiplier effects in local economies. Even in the face of efforts to limit their engagement and the benefits they accrue from the crop, smallholders show commitment and skill in supplying dominant commodities under extremely difficult circumstances. The Malawian case is instructive (see Prowse 2013, for a recent summary of the history of tobacco production in Malawi). The re-imposition of controls on the marketing of smallholder tobacco in the 1920s, 1940s and 2000s did little to limit smallholder success: smallholders maintained or even increased total tobacco production when such substantial controls were imposed. The point here is that a regulated marketing structure has not been antithetical to continued peasant/smallholder success at these times. This is not to say, however, that tobacco production led to accumulation and success for all who adopted the crop. Far from it. Even during periods with a supportive government, profit rates for many declined in real terms (as they have in recent years as well). In addition, greater commercialisation through tobacco production and especially through contract farming has led to greater differentiation within smallholder communities, reconfiguring power relations.
The second point is that not only elites in Africa shape the extent to which smallholders grow and benefit from supplying a dominant crop, but policy reforms, in collaboration with donor agencies, influence the broader crop choices smallholders make through the price signals that they receive and the institutional framework into which they are embedded. The Malawian case is again instructive. Smallholder adoption of burley tobacco on customary land was expected to lead to increases in food crop production (via an intensification of hybrid maize production). The extent to which this occurred is contentious. As examined in detail in Chap. 2, the framing of the smallholder adoption process in Malawi was overoptimistic and not attuned to the preferences and practices of smallholders themselves. Elites in Africa and their development partners may be able to make better policy choices regarding dominant commodities when the preferences and practices of smallholders are taken into account.
The third and final broad point is that elites always ensure their own interests are served. As we see in all countries of the world, vested interests within elite circles swirl around and soak into the dominant industry in a nation. Where supernormal profits are being made, firms fight to retain control of their share of these profits through methods both fair and foul. Where informal forms of decision making supersede the formal theatre of political parties, parliament and the judiciary, firms have a considerable ability to influence policy for their own benefit. This is not to say that a government intent on challenging the status quo (perhaps because new members of a cabinet are not receiving their ‘fair’ share of profits) is impotent. Within their own geographical boundaries, elites can display considerable strength, moulding an institutional framework and the rights of employment and residence to improve their and their nation’s benefits from the main industry. But outside their own borders, the ability of African countries to coerce or nudge international actors, whether firms or other non-African states, is circumscribed. Indeed, and as we will see below, clamping down on international firms at home may well make international interactions, such as securing vital products that oil the wheels of the economy, much harder. This is in contrast to Western countries where the degree of interaction between the activities of multinationals and ministries of foreign affairs waxes and wanes dependent on cycles of growth and nationalism within economic and political spheres, respectively. In essence, and as this case from the warm heart of Africa will highlight, whatever flavour of political party is in government, the power within dominant agricultural industries tends to be reinforced through cooperation, co-option or deception.
So, in such a context, where do the drivers of change within dominant agricultural industries come from? Within a functional democratic polity, social movements, civil society organisations and progressive political parties can play an important role. However, at the international level their role is limited. Here, changing patterns of demand from clients and customers play the most important role. New requirements within existing markets or the preferences of new markets are the main force of change within these industries. New forms of demand precipitate technological changes, marketing structures, farm-based practices and can reconfigure the cosy relationship between multinational and national elites. Such changes create windows of opportunity for established actors to reinforce the control they have over the industry, for new actors to gain a foothold within the industry or for political elites to ensure that there is a new settlement such that the benefits from the commodity are shared more equitably within the country. Such changes also create a window of opportunity for other industries in the country to learn: to transpose lessons and innovations from one industry to the next; to ensure that budding markets and commodities are nurtured; and most importantly to ensure that the country reduces reliance on a single commodity and creates a portfolio of industries with different risk profiles. Such windows of opportunity can also create new patterns of predation if there is a lack of countervailing power.
As is clear from the above, this monograph utilises different economic, social and political theories. This introduction and conclusion, which bookend the monograph, are at the macro level and use a political economy lens. We simply define political economy as how groups in a society (based on class, ethnicity, kinship, ideology or collective economic interests) compete for and use resources, rents and power. Chapters 6 and 7 are also at the macro level and utilise a similar approach to understanding vertical integration and Malawi’s current malaise, respectively.
Chapter 2 uses theory derived from agricultural economics and is at the micro level of the farm. The most innovative chapter, Chap. 5, uses social theory, specifically Englund’s (1999) contribution to the moral economy and social relations to understand the pivotal role of tobacco brokers in rural arenas. The kernel of the monograph, Chaps. 3 and 4, is at the meso level of institutions and markets. These chapters use value chain concepts of institutional frameworks, rents, governance, systemic efficiency and upgrading to understand the power and profits held by different actors and the implications of their distribution for smallholders.
These core chapters contribute to the concept of traceability, the red thread which runs through the chapters of the monograph. The concept of traceability stems from the value chain literature, specifically on value chain governance, which asserts that tacit coordination via markets is increasingly replaced by explicit coordination through vertical integration to allow direct exchanges of information between nodes in value chains. There are three interlinked reasons for greater traceability: greater demand for non-standard products, a greater role for standards and certification, and risk reduction. When clients or consumers require a product to adhere to particular production or process standards, the extent to which lead firms are able to direct/persuade/coerce/control other firms from supplying a traceable product are scale (large firms have more power to influence other firms) and the availability of sanctions (such as creating, or increasing the height of, a barrier to entry).
The further concept we utilise in the monograph is transformation, by which we mean a shift away from low-productivity agriculture and a relative increase in the contribution of high-value agriculture, manufacturing and services. Unlike classical theories of structural change (such as Lewis) where the relative contribution of agriculture to the economy declines, especially theories of unbalanced growth which assert the need for a large-scale investments in the industrial sector to precipitate transformation (e.g., the models of Rosenstein-Rodan or Hirschman), our understanding of transformation reflects Nurske’s arguments for a balance between sectors, including agriculture, where increases in productivity, whether in agriculture or manufacturing, lead to a virtuous circle of greater demand and future growth. Therefore, we see increases in agricultural productivity as one component of transformation. This introductory chapter now brings in the methods and structure of our monograph. It outlines the blend of research methods utilised. Finally, it outlines the structure of the monograph and argues that the blend of survey, ethnographic, value chain and political economy analysis helps to understand contemporary developmental challenges in similar economies on the continent.
The typical approach to researching both macro and micro economic phenomena in Africa is through using quantitative methods on large-scale secondary datasets. Scholars who work within development economics, economic history and political science often have a comparative advantage in testing theoretical propositions using elegant models which contain strict assumptions about how the economy and economic agents function. This is important work. But there are downsides to such an approach. First, the dataset itself may not contain precisely the right variables such that proxies need to be used, or that variables are not normally distributed such that they need to be transformed to the extent that the model’s requirements are met (complicating the interpretation of coefficients). Second, the vari...