LACK OF COLLATERAL ON THE FARMING OPERATIONS

Lack of Collateral on the Farming Operations in sub-Saharan Africa

Table of content

INTRODUCTION3

CONCEPTUAL MODEL LINKING TENURE TO AGRICULTURAL PRODUCTION5

DESCRIBING LAND TENURE IN SUB-SAHARAN AFRICA6

(a). The language of tenure and tenure security6

(b). The evidence on land tenure and land tenure security7

(i). Land markets9

(ii). Land distribution10

(iii). Tenure security12

(iv). The case of women14

THE CONTRACT FARMING DEBATE15

FACTORS AFFECTING THE SUCCESS OF CONTRACT FARMING SCHEMES FROM A SMALL FARMER STANDPOINT19

(a)Scheme staffing and farmer-company relations20

(b) Alternative production possibilities21

CONCLUSION AND RECOMMENDATION22

REFERENCES26

Lack of Collateral on the Farming Operations in sub-Saharan Africa

Introduction

Agricultural growth as a means for poverty alleviation in Africa is once again given considerable attention (Woodhouse, 2003 ) and with that a renewed interest in the factors that promote or inhibit agricultural investment, including land tenure and land tenure security. For example, the issue of land tenure in Africa has been mentioned as important in (Roth et al., 1994), (FAO, 2005). It has received varying degrees of attention in the Poverty Reduction Strategy Papers produced by many African countries. Finally, a large number of African countries are at various stages of reviewing or reforming their land policies and laws(Quisumbing et al., 1999).

The study of tenure and its effects on agricultural productivity is not new, but is particularly challenging given that many different types of land tenure systems are in existence, the ways in which they impact on farmer incentives are not easily understood, and it is perceived that tenure problems may be among the most difficult to “fix” through policy reforms. The key question that concerns this paper is the extent to which this large body of research has provided clear evidence on land tenure problems for smallholder agriculture as well as implications for policy response.1 In order to answer this, the paper evaluates the convergence or divergence among economic research results related to land tenure, tenure security, and their impact on land investments and agricultural productivity in Africa and how these relate to hypotheses generated from the economic theory of property rights. Both the theoretical implications and empirical results are then compared with the treatment of land tenure in recent important policy documents.

The analysis of land tenure—agricultural productivity relationships will be based primarily on recent (i.e., within past 15 years) economic studies of land tenure systems and reforms in Sub-Saharan Africa. The aim is to discuss a sufficient number of comparable studies from which conclusions about the nature of congruence or divergence of the empirical findings can be drawn. On the policy side, the analysis covers major poverty or agricultural strategy documents that have been published in the past few years, including those cited in the opening paragraph, and in 26 Poverty Reductions Strategy Papers (PRSPs), which have all been completed since 2002. The PRSPs have been included because they provide a test of how important tenure issues are to African governments. Furthermore, they are important for land policy funding and thus implementation, which has been noted as a major problem in Africa(Deininger and Castagnini, ...