Farming as Financial Asset. Stefan Ouma
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target="_blank" rel="nofollow" href="#litres_trial_promo">1989: 51).2 This system was to prevail almost unchanged until the 1980s, with the public Rural Banking and Finance Corporation (RBFC) serving as the most important lender, but also other institutions such as stock and station companies, insurance companies, commercial and trading banks, investment and finance companies, and solicitors, families and trusts generously extending credit to Kiwi farmers (Le Heron 1991). The RBFC-backed system of credit provision was abandoned only during the neoliberal restructuring of the 1980s, which led to a further globalization of the finance–farming nexus in Aotearoa New Zealand (Argent 2000). Against the backdrop of rising interest rates, the burdening nature of farm debt and the restructuring of the farming sector according to free market principles (Wallace 2016), experts argued that farmers should open up to new forms of capital, such as equity, so that non-farm investors would have “greater opportunities to purchase shares in large farms” (Pryde 1987: 6-13).
It was at this time that business-savvy farmers rolled out new organizational structures such as syndication and equity partnerships as part of a more corporate-oriented farming model (Wallace 2016). Although some individuals had already experimented with syndication in the 1970s (Hawke 1985), a model in which the ownership and management of farms is split and thereby allows the entry of other (non-farming) investors, it became more widespread in the 1980s. For instance, a group of entrepreneurial farmers helped set up the New Zealand Rural Property Trust, opening up Aotearoa New Zealand farmland to passive investment by superannuation funds from Australia. By the late 1980s the trust held 34 farming properties across Aotearoa New Zealand (Le Heron 1991: 164). Interestingly, its key architect would also become one of the crucial players in the new finance-driven land rush in the late 2000s (see Chapters 7 and 8).
The case of Aotearoa New Zealand tells us that finance capital was crucially involved in the transformation of imperial “frontiers into assets” (Weaver 1999), but how this advanced varied significantly from frontier to frontier. The work of Rudolf Hilferding (1981 [1910]), writing at the height of the colonial frenzy, allows us to connect these various imperial frontiers. He argued that “[t]he export of capital and the struggle for economic territory” were tightly interlinked during the age of empire. Yet neither the export of capital nor the conquest of new territory was as straightforward as in this case (or Australia, Argentina or Canada, to name a few other dominion states). This is exemplified by the example of modern-day Tanzania. Like Aotearoa New Zealand, it is an example of capitalism’s expansionary drive to tap into new markets, export its internal social or environmental contradictions (e.g. “surplus people” or “environmental destruction”) and appropriate new human and non-human resources. But it is also an example of how local factors may change that project, and how each postcolonial government has tried to correct its respective colonial heritage, albeit with often limited or short-lived success.
The coast and some hinterland parts of mainland Tanzania (the island of Zanzibar is another part of it) had been profoundly influenced by the slave, ivory and spice trade, backed by Arab, Chinese, Persian and Indian merchant capital for centuries, when it became the focus of organized merchant capital from the West in the 1830s (Coulson 2013 [1982]). When the region was proclaimed as German East Africa in the 1880s, this was spearheaded by the Society for German Colonization (Gesellschaft für deutsche Kolonisation: GfdK), rather than by the state itself, which was reluctant to spent taxpayers’ money on the colonial project. Like similar outfits to follow, the society had various shareholders, with all of them betting on the colonial ventures of its notorious director Carl Peters (Peter 1990: 199). After having negotiated access to land with a number of local authorities in the north-east of the country, the GfdK managed to get state backing and was renamed the German East Africa Company (Deutsche-Ostafrikanische Gesellschaft: DOAG) in 1887 (ibid.). The DOAG set up plantations as the first “major institution” (Rodney 1983: 1) of German colonialism, but also rented out land to settlers. Altogether, the company was involved in at least 24 other companies spanning different sectors. Later, Deutsche Bank and other banks were also crucial providers of credit to support the building of the colonial space economy (Slater 1977). Some of these “did good business in that they were able to declare high dividends” (Peter 1990: 208). Since the Germans wanted to turn Tanganyika into a settler state, the DOAG also provided credit to white settlers, although this provision seems to have been quite limited. This plan was soon abandoned by the colonialists after they faced local resistance to the expansion of large-scale farms from the 1890s onwards. In 1891 the state took over territorial control from the DOAG, and proclaimed all land occupied or unoccupied as Crown land, except for that land already in private ownership or owned by chiefs, who were often collaborators in the colonial project (ibid.). Despite this adjustment, settler estates and plantations cultivating sisal, coffee, tea, tobacco, rubber and cotton numbered around 700 in the Usambara and Kilimanjaro regions of the north-east and north, and a few other places, by 1912.
Even though not all were set up by German investors (the Germans restricted the involvement of other nations), they marginalized local populations and significantly altered existing agricultural practices (Sunseri 2005: 1540). When the Germans saw that a settler-colonial project akin to the Aotearoa New Zealand venture was not possible, they tried to expand cash crop production by imposing taxes on smallholders, which thereby were forced to join the export economy. Credit provision to local farmers was extremely limited, however, and even restricted by law (Coulson 2013 [1982]). It served the extractive need of the colonial economy rather than allowing local farmers to transform their farms. As in Aotearoa New Zealand, local people were locked out of colonial credit markets, but, contrary to there, they largely kept their de facto power over land, despite some large-scale appropriations in the north and north-east of the colony. This would initially remain the case under the British, who took over Tanganyika after Germany’s loss in the First World War as part of a League of Nations mandate in 1922. Under these political restrictions, the British moved away from the alienation of local land to the promotion of African cash crop production (Aminzade 2013), espoused by the Colonial Development Act (1930) and Colonial Welfare Act (1940) respectively.
After the Second World War, Britain shifted to a more transformative approach that was meant to promote “modern farming” in order to serve the rising food and foreign exchange needs of the empire. The infamous groundnut scheme, supported by public money via the Overseas Food Corporation, but also the extension of private credit to large-scale farming settlers via commercial banks, particularly the Land Bank (founded in 1947), was indicative of this shift (Mittelman 1981: 190). By 1959 1,284,647 hectares of land had been alienated for commercial agriculture (Aminzade 2013: 35).3 Additionally, the Colonial Development Corporation (now called the Commonwealth Development Corporation: CDC), founded in 1948 and widely considered to be the first development finance institution, became an important provider of loans to large-scale plantations and food enterprises across Africa. It reinvented itself as a private-equity-focused institution in the late 1990s (and will reappear later as a backer of one of the Tanzanian investment cases).
When Tanganyika became independent, in 1961, it quickly embraced an Afro-socialist path of development. After 1967 many large export-oriented estates, plantations and businesses in other sectors were nationalized. Although foreign