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The Need for an Appropriate Industrial Strategy to Support Peasant Agriculture

Published online by Cambridge University Press:  11 November 2008

Ann Seidman
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MOST economists agree that industrialisation should help to increase agricultural productivity and raise the living standards of rural producers. In the 1970s, however, manufacturing in sub-Saharan Africa, even including South Africa, grew at a slower rate than in any other region except South-East Asia. Furthermore, far from promoting the anticipated outcome, industrialisation in Southern Africa undermined peasant farm cultivation and contributed to the present crisis in African agriculture.

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Articles
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The Journal of Modern African Studies , Volume 24 , Issue 4 , December 1986 , pp. 547 - 575
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Copyright © Cambridge University Press 1986

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References

Page 547 note 1 The United Nations has designated 1980–90 as the Industrial Development Decade for Africa. The Economic Commission for Africa, the United Nations Industrial Development Organisation, and the Organisation of Africa Unity have prepared a joint programme of action focusing on the transfer of industrial technology and the promotion of intra-African industrial co-operation. The Lima Declaration of 1975 proposed that, by the year 2000, Africa should double its industrial output to two per cent of manufacturing value-added world wide.

Page 547 note 2 Nixson, F. I., ‘Some Aspects of the Contradiction of the Import Substituting Model of Development’, Conference on Economic Policies and Planning under Crisis Conditions in Developing Countries, Department of Economics, University of Zimbabwe, Harare, 2–5 September 1985;Google Scholar and U.N.I.D.O., Industry in a Changing World: special issue of the industrial development survey of the Fourth General Conference of UNIDO (New York, 1983), p. 101.Google Scholar

Page 548 note 1 The rôle of South African industrialisation in building up a military industrial complex that enabled the minority to maintain its repressive rule at home and dominate the Southern African region is documented elsewhere. See Makgetla, Neva and Seidman, Ann, Outposts of Monopoly Capitalism: Southern Africa in the Changing Global Economy (Westport, Conn. and London, 1980);Google Scholar and Seidman, Ann, The Roots of Crisis in Southern Africa (Trenton, N.J., 1985).Google Scholar

Page 549 note 1 The number of foreign migrant workers dropped from 144,000 (30 per cent of the foreign labour force) in 1964 to 15,000 (5 per cent) in 1983. Malan, Theo, ‘Migrant Labour in Southern Africa’, in Africa Insight (Pretoria), 15, 2, 1985, pp. 103–14.Google Scholar

Page 549 note 2 Second Carnegie Inquiry into Poverty and Development in Southern Africa, 1983 Midway Report, Carnegie Conference, Cape Town, April 1984.

Page 549 note 3 Seidman, The Roots of Crisis in Southern Africa.

Page 549 note 4 Makgetla and Seidman, op. cit.

Page 550 note 1 Source: U.N.I.D.O., Handbook of Industrial Statistics, 1984 (New York, 1985), Table 2.Google Scholar

Page 550 note 2 Seidman, The Roots of Crisis in Southern Africa.

Page 550 note 3 Market-based import-substitution industrialisation, which simply replaces former imports by domestic manufactures, is not the only possible kind. See Seidman, Ann, Planning for Development in Sub-Saharan Africa (New York and Dar es Salaam, 1974).Google Scholar

Page 550 note 4 Department of Economics, ‘Long Vacation Pilot Research Project on the Ingredients of an Industrial Strategy to Stimulate Rural Development: the formal sector’, University of Zimbabwe, Harare, 1981.

Page 551 note 1 de Vletter, Fion, ‘Rural Development and Agricultural Dualism — A Case Study of Swaziland’, Social Science Research Unit, University College of Swaziland, Kwaluseni, 1981, p. 4.Google Scholar

Page 551 note 2 ‘Long Vacation Pilot Research Project’.

Page 551 note 3 Ibid.

Page 551 note 4 Under minority rule, the white-settler community, less than three per cent of the population, declared the Unilateral Declaration of Independence (U.D.I.) from Britain in order to prevent black participation in government. As in South Africa, the whites exercised state power to shape industry to support their privileged status.

Page 552 note 1 Sources: United Nations, Direction of Trade Statistics Yearbook, 1983 (New York, 1984),Google Scholar except for Botswana, Lesotho, and Swaziland, for which data appear in the Economist Intelligence Unit, Quarterly Economic Review. Annual Supplement, 1983 (London, 1984).Google Scholar

Page 552 note 2 Mihyo, Paschal B., ‘The Transfer of Technology of Tanzania's Public Enterprises’, Faculty of Law, University of Dar es Salaam, 02 1984, p. 7.Google Scholar

Page 552 note 3 Seidman, Ann, ‘Why Zimbabwe Needs a Long Term Industrial Strategy’, Economics Society of Zimbabwe, Department of Economics, University of Zimbabwe, 1981.Google Scholar

Page 552 note 4 Nixson, op. cit. p. 20; and Ndlela, Daniel B., ‘The Capital Goods Sector and Implications for Planning Industrialization in Zimbabwe’, Conference on Economic Policies and Planning under Crisis Conditions,Harare,September 1985, p. 5.Google Scholar

Page 553 note 1 In Tanzania, for example, as worsened terms of trade hampered the import of parts and materials required by partially state-owned import-substitution industries, reducing their output and profits, sales taxes provided an increasing share of government revenues. See Seidman, Ann, Money, Banking and Public Finance in Africa (London, 1986).Google Scholar

Page 553 note 2 Nixson, op. cit. p. 12.

Page 553 note 3 Mudenda, Gilbert, ‘The Management of Import Substituting Industrialization in Zambia’, Conference on Economic Policies and Planning under Crisis Conditions, Harare, September 1985, p. 3.Google Scholar

Page 554 note 1 Singh, Ajit, ‘The Continuing Crisis of the Tanzanian Economy: the political economy of alternative policy options’, Harare, 09 1985.Google Scholar

Page 554 note 2 To import these items would have cost even more scarce foreign exchange.

Page 554 note 3 Singh, op. cit. p. 13.

Page 554 note 4 Kalyalya, Denny, Mlhanga, Khethiwe, Seidman, Ann, and Semboja, Joseph, Does Aid Work? a pilot Southern African learning process (Trenton, N.J., forthcoming).Google Scholar

Page 554 note 5 In Zambia, for example, one enterprising enterpreneur used an old bicycle wheel to blow air into his ‘furnace’ – an empty oil drum – to make hoes and axes out of metal secured from one of the bridges bombed out by Ian Smith's airforce just before Zimbabwe attained independence.

Page 555 note 1 Nixson, op. cit. p. 15, notes that neo-classical economists focus on the static inefficiency of import-substitution industries, but neglect to investigate their potential dynamic effects.Google Scholar See also Nixson, Fred, ‘Import-Substituting Industrialization’, in Fransman, Martin (ed.), Industry and Accumulation in Africa (London, 1982), pp. 38–57.Google Scholar

Page 555 note 2 Such an austerity package, which included reduced government social services and employment, a wage freeze, higher interest rates, and devaluation, tended to throw the burden of the crisis on the urban workers and peasants in order to enable the country to repay its debts.

Page 555 note 3 World Bank, Accelerated Development in Sub-Saharan Africa: an agenda for action (Washington, D.C., 1981).Google Scholar

Page 555 note 4 E.g. the U.S. Commodity Import Program provided U.S. credit for the import of U.S. machinery and equipment which replaced the sometimes more labour-intensive outputs of local manufacturers.

Page 555 note 5 E.g. the World Bank required that an international bid be accepted for the Hwangwe thermal-plant boilers, although these could be supplied by local manufacturers.

Page 556 note 1 U.N.I.D.O., Industry in a Changing World, p. 8.

Page 556 note 2 World Bank, op. cit.

Page 557 note 1 Kaplinsky, Raphael, ‘Locational Patterns of Direct Foreign Investment and the New International Division of Labour in Manufacturing’, Conference on Economic Policies and Planning under Crisis Conditions in Developing Countries,University of Zimbabwe,Harare,1985, argues the need to disaggregate direct foreign investment in manufacturing beyond the common distinction between horizontal investment (i.e. a ‘multiplant firm’ with factories in several locations producing the same items) and vertical investment (i.e. a multiplant firm with outputs in some plants as inputs for other plants). He points out that ‘sequential’ vertical investment (a chain of processes in different locations) differs from ‘disarticulated’ vertical investment (the breaking up of the labour process, with individual components being produced in different locations to meet the needs of the world market in what has been called the ‘New International Division of Labor’). Disarticulated vertical investment, Kaplinsky asserts, has so far involved only about 20 per cent of direct foreign manufacturing investment in the Third World.Google Scholar

Page 558 note 1 Kaplinsky, op. cit., argues that new technologies have led to ‘systemofacture’, creating scale economies in indirect production costs, in research and development, management, purchasing inputs, and marketing outputs as important features in the growth of transnational corporations. On the one hand, new technologies permit reduced scale in mass production in flexible smaller plants, if necessary built near the final markets, reducing the effect of scale economies on location. However, more transnationals, seeking to reduce inventories, will site suppliers near their basic plants, introducing a trend that might contradict the world sourcing pattern that appeared to be gaining in the 1960s and 1970s. This, combined with the protectionist trends of the 1980s, may reduce the tendency for transnationals to move manufacturing plants abroad. The outcome will be determined, he concludes, by the interaction of political, economic, and technological factors.

Page 559 note 1 This assumes the best-case scenario. In some cases, government decision-makers primarily seek better jobs and increased incomes for themselves, either as managers and directors of new state manufacturing corporations, or through various forms of bribery offered by transnationals for profitable contracts. Nixson, ‘Some Aspects of the Contradiction of the Import Substituting Model of Development’, pp. 15–16, suggests that to explain the nature and extent of sometimes arbitrary and seemingly irrational government intervention, we need a theory of the state.Google Scholar For that, see Seidman, Robert B., The State, Law and Development (London, 1978).Google Scholar

Page 559 note 2 In this context, the transnational firm that builds the factory pays higher-than-world-prices for machinery, equipment, materials, and parts imported from an overseas affiliate. This raises the costs to the factory, reducing the apparent profits it earns in the country. In reality, however, the overseas affiliate has received the profits in advance through the high prices paid for the goods it sold the factory. For this and the many other forms of transfer pricing, see Murray, Robin, Multinationals Beyond the Market (New York, 1981).Google Scholar

Page 560 note 1 Kaplinsky's analysis of ‘systemofacture’ suggests that, where a third-world market is large enough to justify domestic production, or import-controls necessitate it, the transnationals will be likely to induce component suppliers to locate within the same market, rather than abroad. In Africa, he notes that only South Africa, Algeria, Nigeria, Egypt, and Morocco have markets large enough in terms of population and income per capita to qualify for this status. Kaplinsky, op. cit. p. 17.

Page 561 note 1 Because of their support for the Nazis, some Nationalist leaders had been jailed by the British during World War II. Once in office, the Nationalists specifically declared that they aimed to strengthen the control of Afrikaners (i.e. persons descended from the early Dutch settlers) over the economy in order to reduce the consequences of what they viewed as English domination.

Page 562 note 1 In South Africa, mining-finance houses came into being as mine companies reinvested major shares of their profits in a wide range of industrial, agricultural, and banking activities, achieving a dominant rôle in the South African economy.

Page 562 note 2 Makgetla and Seidman, op. cit.

Page 562 note 3 Cf. Seidman, The Roots of Crisis in Southern Africa, ch. 3.

Page 563 note 1 Department of Labor, United States Bureau of Labour Statistics, Employment and Earnings (Washington, D.C.), 29, 1, 1982; and Institute of Race Relations, Survey of Race Relations, 1983 (Johannesburg, 1984).Google Scholar

Page 563 note 2 Calculated from U.S. Department of Commerce, Survey of Current Business (Washington, D.C.), 08 1980.Google Scholar

Page 563 note 3 Seidman, The Roots of Crisis in Southern Africa, pp. 47ff.Google Scholar

Page 563 note 4 Carnegie Conference, op. cit.

Page 564 note 1 To function as a pole of growth, an industry must be vertically integrated, and be large enough to stimulate production, employment, and rising living standards throughout an entire area. See Green, Reginald H. and Seidman, Ann, Unity or Poverty? The Economics of Pan-Africanism (Harmondsworth, 1968);Google Scholar and Djefflat, Abdelkader, ‘Les Difficultés de l'intégration inter-industrielle en Algérie et la dépendance technologique’, Meetings on African Regional Perspectives, United Nations University, Dakar, 1984.Google Scholar

Page 564 note 2 E.g., see Moyo, Nelson, ‘Constraints on Industrialization in Botswana’, in Oommen, M. A., Inganji, F. K., and Ngcongco, L. D. (eds.), Botswana's Economy Since Independence (New Delhi, 1983), pp. 219–23.Google Scholar

Page 565 note 1 The United Nations imposed sanctions in an effort to force the minority to grant majority rule. Since South Africa refused to enforce the sanctions, however, the transnationals maintained their links with their Zimbabwe affiliates through their South African regional headquarters. This tied the Zimbabwean economy increasingly tightly into the South African orbit.

Page 565 note 2 Seidman, Ann, ‘Alternative Development Options for Zimbabwe’, in Zambezia (Harare), 1983, pp. 13–39.Google Scholar

Page 565 note 3 Stoneman, Colin, ‘Strategy or Ideology? The World Bank/IMF Approach to Development’, Conference on Economic Policies and Planning under Crisis Conditions, Harare, September 1985; Makgetla and Seidman, op. cit.; and Seidman, ‘Alternative Development Options for Zimbabwe’.Google Scholar

Page 566 note 1 ‘Long Vacation Pilot Research Project’.

Page 566 note 2 Ibid.; and Ndlela, Daniel B., ‘The Capital Goods Sector in Zimbabwe’, Department of Economics, University of Zimbabwe, Harare, 1984.Google Scholar

Page 566 note 3 Mihyo, op. cit. p. 1.

Page 566 note 4 Mudenda, op. cit. p. 6.

Page 566 note 5 Confronting South African destabilisation, and suffering scarcities of managerial and technical personnel after the Portuguese left, Mozambique and Angola encountered difficulties in ensuring the full utilisation of their existing industrial capacity. They, too, sought foreign investment, and succeeded in attracting some in the area of raw materials, particularly oil exploration, but almost none in manufacturing.

Page 567 note 1 This was the case not only in Southern Africa. In Algeria, where government oil revenues funded a significant part of the industrial development, the state nevertheless made contracts with foreign managers that in some cases left the national economy more, rather than less, externally dependent. Djefflat, op. cit.

Page 567 note 2 Lewanika, Akashambatwa, quoted in Mudenda, op. cit. p. 13.Google Scholar

Page 567 note 3 Coulson, Andrew C., ‘Tanzania's Fertiliser Factory’, in The Journal of Modern African Studies (Cambridge), XV, 1, 03 1977, pp. 119–25.Google Scholar

Page 568 note 1 Mihyo, op. cit. p. 9.

Page 568 note 2 ‘Long Vacation Pilot Research Project’.

Page 569 note 1 Sources: Economist Intelligence Unit, Quarterly Economic Report for each country, 1983 (data not available for Mozambique);Google Scholar 1982 debt-service ratio for Zambia and Lesotho calculated from International Financial Statistics (Washington, D.C.); and International Monetary Fund, 12 1984.Google Scholar

Page 569 note 2 Seidman, Ann, ‘The Distorted Growth of Import-Substitution Industry: the Zambian case’, in The Journal of Modern African Studies, XII, 4, 12 1974, pp. 601–31.CrossRefGoogle Scholar

Page 570 note 1 Burdette, Marcia, The Political Economy of Zambia (Denver), forthcoming.Google Scholar

Page 570 note 2 Makgetla, Neva Seidman, ‘Theoretical and Practical Implications of I.M.F. Conditionality in Zambia’, in The Journal of Modern African Studies, XXIV, 3, 09 1986, pp. 395–422.CrossRefGoogle Scholar

Page 571 note 1 This so-called ‘Jensen report’ contains many methodological errors, in addition to its failure to examine industry's essential rôle in restructuring the national economy. See Stoneman, op. cit.

Page 571 note 2 They claimed that the new government minimum wage – though still only two-thirds of the estimated poverty datum line – was prohibitively high.

Page 571 note 3 Ndlela, op. cit.

Page 571 note 4 Singh, op. cit.

Page 573 note 1 See, for example, Nixson, ‘Some Aspects of the Contradiction of the Import Substituting Model of Development’; Djefflat, op. cit.; Singh, op. cit.; Green and Seidman, op. cit.; Seidman, Planning for Development in Sub-Saharan Africa, and The Roots of Crisis in Southern Africa; Makgetla and Seidman; and Ndlela, op. cit.

Page 573 note 2 This assumes that the ruling political party is committed to restructuring the economy to attain balanced industrial and agricultural development designed to meet national needs. Even when it initially is – as, at least arguably, was the case in Angola, Mozambique, Tanzania, Zimbabwe, and Zambia – the experience of Southern African states suggest that unless the ruling party takes appropriate and deliberate steps to alter the institutional structures, its individual functionaries will find themselves unable to plan and implement essential changes in the distorted inherited pattern of resource allocation. See Seidman, The State, Law and Development, and Seidman, Robert B., ‘The State in Independent Namibia: lessons from Zimbabwe's first three years’, U.N. Conference at the United Nations Institute for Namibia, Lusaka, December 1984, for a discussion of some of the important aspects of this issue.Google Scholar

Page 574 note 1 S.A.D.C.C., ‘Industry – Progress of the SADCC Regional Plan of Industrial Co-operation,’ Report to Heads of State, Mbabane, February 1985.

Page 574 note 2 See Green and Seidman, op. cit., for the issues relating to possible continent-wide co-ordination. These remain similar even for co-ordination at a less ambitious regional level; Seidman, Ann, ‘Towards Regional Integration’, Southern African University Social Sciences Conference, University of Zimbabwe, Harare, February 1982.Google Scholar

Page 574 note 3 Seidman, The Roots of the Crisis in Southern Africa, ch. 7.