Allocation of Resources
Land
The formation of farmer groups, which are allocated a portion of land by the chief, can help to off-set most of the problems usually associated with customary land law. Indeed, within in the context of the project, it seems recommendable to
continue the practice to attribute land use rights to groups. Also in the case that leasehold agreements become possible on Swazi Nation Land as a consequence of the proposed new National Land Policy, the groups should still be the receivers of
the leasehold.
This approach allows to gain some independence in the final assignment of land or shares to individual members/homesteads, and creates wider options for the integration of women and other groups presently having only limited access to land. If
the group formulates its constitution and bye-laws correspondingly, this approach also provides a lever for protecting group interests against free-riding individuals who should – in the extreme – be evicted. Each member's rights and
obligations will be clearly defined and possibly certified by a notary. This includes the right of members leaving the group to be compensated and the definition of the procedure of succession to be followed in the case that a member dies. As
soon as this becomes feasible, the agreement between group and member could take the form of a sub-lease contract for plots worked individually.
Land allocation within WUGs can be delegated to the groups. There are the following basic possibilities:
- Homesteads or interested individuals receive the same area respectively the same share in joint activities;
- Homesteads/individuals receive plots or shares according to criteria like: interest, former rights to rainfed land, labour capacity, needs, ability to pay an entrance fee, or a mixture of several criteria.
Water
Water is the key resource for development in the project area. Like Swazi Nation Land, water is presently not tradable. Unlike Swazi Nation Land, it is administered by Government and the use right is limited in time on the basis of (renewable)
permits.
Within the context of a project which is supposed to attract considerable investment from the donor community it seems necessary to create greater security concerning the water rights involved. This could be achieved by passing a law or a
decree affirming that – for a period of not less than 30 years - the water stored will be reserved for smallholder irrigation in the project command area unless demand is lower than supply or unless an agreement has been reached with the
legitimate representatives of the smallholder farmers (however, partial use for meeting basic or emergency needs, e.g. for drinking water, should remain possible on prior notification only). Within this general framework, renewable water permits
can then be issued to the central water management unit, whose set-up still needs to be defined.
There is no need to issue water use permits to the individual water user groups. They can sign a service contract with the central water management unit, based on the strict rule of no payment – no service, as was already proposed in the
feasibility study. However, since the available quantity of water is limited, it may be necessary to establish water quotas. These quotas should be based on net irrigable land per water user group and must be balanced with the sugar quota, since
sugarcane will be the leading crop, showing at the same time high irrigation water demand.
Sugar quotas
Each water user group may initially only have access to a limited sugar quota proportional (land-based) to the total transformation and capacity marketing available for the project area. It is also possible that the sugarcane area has to be
restricted because of policy considerations (e.g. avoiding dependence on one crop). If some groups decide to cultivate less sugar than they would have right to, the surplus can be distributed among interested groups in a second round.
In each case, the sugar quota should be allocated to the group, and not to individuals.
Capital
It has been proposed that the water user groups shall be fully responsible for financing on-farm irrigation investment and crop establishment. Evidence from the farming system analysis suggests that this is a viable approach. The alternative
proposal discussed in the study of pre-financing on-farm investment through the project in order to gain better control over the implementation progress and technical quality should no longer be considered since it contradicts the principle of
decentralisation, administrative simplicity, sharing of responsibilities and ownership by the water users.
Farmers would have to co-operate directly with specialised credit organisations. These can be commercial banks or organisations with social objectives like the Enterprise Trust Fund. The final solution will depend on the question which
organisation offers conditions that are more appropriate to a smallholder environment and on the amount of finance available: Commercial banks would probably agree to base their operation on own capital if only their losses were covered by a
third party, meaning that relatively little capital will be required from donors.
Three different items need to be considered:
- Complete investment (on-farm irrigation and crop establishment) for sugarcane production;
- On-farm investment on plots to be used for other crops;
- Initial establishment cost and operating capital for other crops.
At least in the case of sugarcane, farmer groups have generally no problem to repay the credits received within short time-spans (about three years), while at the same time making previsions for reinvestment. For irrigation equipment for areas
under other crops, repayment periods would probably have to be longer. For the organisation managing the credit, the ideal solution would be to deduct all credit payments from sugarcane receipts, which can be easily controlled. However, this may
only be possible if the proportion of other crops is relatively small in comparison to sugarcane. A compromise would be to finance all on-farm irrigation investment – whether for sugarcane or for other crops – against sugarcane receipts,
possibly granting a longer repayment period, while capital for the production of other crops will have to be provided by the farmers from savings (including sales of cattle stock) or by using first dividends from sugarcane. Under this model,
reaching full development may need more time, but farmers will probably end up being more conscious and dedicated "entrepreneurs". |
