The long walk to economic freedom: smallholder farmers’ access to technology and capital

Abstract

Having worked in the private sector and NGOs for some years prior to starting my PhD, I was greatly surprised to what extent the joint efforts of multilateral organisations, international governments, NGOs and private sector efforts are not enough to help Africa's smallholder farmers produce the right crops in optimal quantities, and more importantly, to make enough income through farming to sustain themselves beyond the minimum income of $US1.25 per day. A great majority of African farmers are still smallholders, despite the evident lack of scale economies. Exploitation of the continent's resources by the rest of the world persists, given our inability to cultivate oil palm, coffee or cocoa in the Northern hemisphere; yet the added value of production of raw materials for farmers remains fundamentally unrewarding. Much of today's farmers in Sub-Saharan Africa are oppressed by unregulated capitalism and failing institutions which are not able to form the kind of welfare states that we enjoy in the Northern hemisphere.The aim of this thesis is to assess to what extent farmers can bypass dysfunctional institutions and enhance welfare by getting access to technology and capital. As we will see, access to these assets is necessary to help farmers optimize farm productivity and give them a choice -independence and freedom -of what they produce, what they sell and to whom, who they borrow from etc. The title of this thesis was inspired by Mandela's book "The Long Walk to Freedom", an autobiography which stands as a symbol of fight against apartheid and colonialism, a life-long battle to liberate the oppressed from the oppressor.The main question my thesis aims to address is this: can access to technology and capital bypass failing states and help alleviate farmers out of poverty? Before explaining how access to technology and capital can help farmers on the road to freedom, I will briefly elaborate on why inefficient institutions keep African farmers in a vicious circle of poverty. Problem statement: Implications of poor institutions in AfricaA common justification of poverty across farmlands in Africa are poor institutions (North, 1989, Acemoglu et al, 2005, which are arguably a result of poor management of resources, red tape, persistent corruption, conflict, etc. Part of the problem in post-colonial Africa are traditional pluralistic societies and political objectives which combine religions and kinship on the one hand and economic demands of modern democracies on the other hand (Skalnik 2013). Locally segmented governments struggle with a barrier between modern and traditional Africa, where the latter is largely dominated ritual, religious, economic and kinship limitations (see a broad review of relevant literature provided in Skalnik, 2013, p. 111). Levcenko (2007) argues that strong institutions enhance contract enforcement, property rights and shareholder protection. On the other hand, countries with weak institutions suffer from incomplete contracts and higher transaction costs of doing business. Poor instit...