In 1962, the Kingdom of Southland gained Independence from a European power, of which it had been a Protectorate for more than sixty years. During the Protectorate, political power had been exercised by a series of governors (in the name of the indigenous monarchy) who had sought to balance the economic and political interests of the metropolitan power against the concerns of the indigenous people, especially the land-owning elite connected to the monarchy. Over time, metropolitan interests had become progressively dominant, such that, by the time of Independence, the higher levels of government, international trade, mining, manufacturing, energy and most of the modern sector of agriculture were in the hands of foreigners.
Prior to the Protectorate, Southland had comprised a feudal agricultural economy, which had been supplying food, oil seeds and fibres (cotton as well as wool) to the four large cities. The cities comprised complex urban societies which, for more than six centuries, had been well established as centres for trade, artisanal production, administration, religion and learning. Mining of silver, copper and tin had been important, and had been carried out under the direct control of the monarchy, and from which the monarchy obtained substantial revenue.
The agrarian structure of the pre-Protectorate period varied according to the potential of the land, and proximity to towns. In the well-watered areas close to towns, the main agricultural unit was the small scale (peasant) family farm, operated by tenants who had rent obligations. At the beginning of this century, rents were generally paid in kind (cereals and livestock) to landlords or their agents but, by the mid-century, cash was replacing kind as the preferred form of rent. Peasant farms were substantially self-provisioning in basic foodstuffs, but marketed produce to obtain money. In the drier areas of lower agricultural potential, land was generally held in common by tribal (or lineage) groups, social stratification was less extreme and livestock played a greater role with, consequently, a smaller proportion of income being generated from cereals.
Despite severe handicaps (unsatisfactory tenurial arrangements, poor market access and, until the late 1940s, the indifference of government) peasant production for the market grew substantially during the Protectorate. By Independence, peasants in the higher potential zones (NAs 1 & 2) were producing a marketed grain surplus of about 200,000 tonnes annually (about one-sixth of their estimated production) and, in addition, were marketing substantial quantities of raw cotton, pulses, fruits, vegetables and livestock. A small amount of tobacco (less than 1000 tonnes) was produced by peasant farmers under the supervision of the parastatal TOBACSO.
During the Protectorate, there was settlement by European immigrants, who opened up farms in the high potential areas (NAs 1 & 2). The land was acquired by purchase or lease from the traditional landlords. In some cases, the newly-settled land was not under current cultivation but, in others, small farmers were expelled from their land and left with the choice of remaining in the area as labourers or of migrating to open new land in the lower potential areas (generally NA 3). The settler farmers produced cereals for the local and export market, fruit and vegetables for export and livestock for the local market. After 1935, a number of settler-owned tobacco farms were opened in drier areas of the country (NAs 2 & 3), producing tobacco mainly for the export market.
By the 1950s, a number of indigenous Southlanders had developed commercial farms with characteristics similar to those of the settlers. Major landlords, notably members of the royal family, began managing some of their land holding as larger farm units. Also, as technology evolved in the direction of greater use of purchased inputs, sharecropping arrangements became increasingly common between indigenous Southland landlords and their tenants. Generally, in return for the landlord's support through the supply of seeds, tools, fertilizer, ploughing and pumped water, the share of the harvest accruing to the landlord increased substantially (from about 20 percent to as much as 60 percent).
Industrial development during the Protectorate period was limited by inadequate infrastructure, the small size of local markets, free trade arrangements with the metropolitan power (which meant that costs and quality had to be competitive with imports from Europe) and minimal encouragement from the government. However, the mining industries, of which copper was by far the most important component, gave rise to the development of sophisticated capital-intensive processing plants (mainly operated by foreign personnel). The energy requirements of the copper refineries made the financing of the River Wadu watershed development possible, which was undertaken by the WRVA. Beginning in 1938, the WRVA was the largest investment made by the Protectorate government, consisting of series of barrages which provided hydroelectric power and water for irrigation schemes developed in the southern littoral region. Development of the hydro and agricultural potential of the Wadu watershed gave a major boost to production of fruits for exports and to the development of agro-processing activities (cotton ginning).
Independence was achieved after ten years of struggle between the colonial power and a broad-based nationalist coalition. The monarchy had played an important role in the nationalist coalition, and the PP (Patriotic Party) the majority party in the legislature at Independence was regarded as close to the monarchy. Two other important members of the nationalist coalition had been the SPL (Southland Progressive League) and the PA (Peasant Alliance).
The PP-led government, formed in 1962, inherited an economy which had been in decline for several years, due to political uncertainty and capital flight. Faced with the situation, the PP pursued a cautious economic policy, and was keen to rebuild the confidence of the business and commercial farming community, the majority of whom were citizens of the former colonial power. The PP government announced that foreign-owned assets would not be subject to compulsory purchase, with the exception of some farmland in areas of very high population density (which would be used for small farm settlement schemes paid for by aid from the former colonial power). The PP's strategy for increasing national ownership of the economy stressed the role of education, of the newly formed SODEVBANK and the use of a work-permit system to phase out dependence on foreign residents who had not chosen to adopt Southland citizenship.
Although the economy began a short-lived recovery in 1963 (see figure 2), it again weakened in 1965. One of the principal causes of the deteriorating economy was the increasingly fragile position of the PP government, which appeared to be losing popular support to the PA and SPL. The government was under fire from the PA for the very modest scope of its land and tenurial reform measures, and was vociferously criticized by the SPL as a mere continuation of the colonial regime. Major planks in SPL policy were nationalization of the copper mines, foreign-owned farmland and import substituting industry, the introduction of strict controls on currency movements and increased protection for domestic industry. The tenuous position of the PP in the face of the radical opposition stimulated further capital flight. The opposition was able to capitalize on what became known as the "AMCOP scandal", the discovery that one of the major mining companies had, over 1964 to 1967 made a series large loans to its holding company AMCOP-INTERNATIONAL, in addition to its normal transfer of dividends. This had involved the transfer of funds out of Southland, creating strain on the balance of payments capital account. The SPL charged the government, and particularly officials of the CBoS, with complicity.
Fearing that it would lose power, the PP dominated Parliament cancelled the parliamentary elections scheduled for 1967, and the King announced that he would rule by decree until a national convention could be held in 1970 to design a "more appropriate constitution". In 1969 popular discontent with the government grew, with large demonstrations being organized by the SLP and the PA. In July 1969 a bloodless military coup took place, and the King and his family left the country. The coup leaders were officers largely sympathetic to the SLP, proclaimed a "Revolution" and announced that, for an interim period, Southland would be governed by a Revolutionary Council, in which a number of leaders of the SLP and PA were invited to join.
In 1971 a new mass political party was formed, sponsored by the Revolutionary Council, known as the Peoples' Development Movement (PDM). In 1972, the PDM became the governing party, with all ministers being civilians drawn from its ranks. The Revolutionary Council, of whom a majority of members were military officers, transformed itself into a "constitutional safeguard", its residual power being that of being able to determine which political parties could be registered for participation in elections.
The first post-revolutionary decade, the 1970s, was marked by considerable economic success. The annual average growth rate was 3.3 percent over 1968 - 1973, accelerating to 4.3 percent over 1974 - 1979, and this strong growth performance was sustained up to 1982. There were a number of important factors behind the economic progress achieved during this time. The nationalization of the mines, a measure announced by the Revolutionary Council in August 1969, took place against a background of rising prices for copper. Although the financial settlement between the former owners and the government was not agreed for several years, the result was a large increase in the resources available to the government. These resources were of much assistance in the energetic import-substitution policies implemented after 1969, which achieved increased growth in industry, and in sectors of agriculture producing for the local market (in particular cereals and sugar).
The government and PDM were slow to recognize that the development strategy of the 1970s was failing to serve the country so well in the 1980s. The difficulties which emerged during SODEVPLAN-III were largely blamed on the external terms of trade, and the hardening of the terms of external borrowing. Although an analysis which pointed to the external origins of the economic difficulties had powerful evidence on its side, it failed to provide clear policy prescriptions.
One group within the PDM drew the conclusion that greater emphasis should be placed on self-sufficiency, and that Southland should gradually reduce its involvement in world markets. The "liberal faction" argued that world markets remained very important as sources of technology and trade opportunities. In their view, the way forward was for Southland to increase its involvement in world markets, by reducing protection, aligning domestic prices with world market prices and welcoming foreign investment, even if this brought with it a greater degree of foreign control.
Until 1988, the "liberal faction" was the weaker voice within the PDM. For many key figures within the PDM, the evidence against the "liberal view" seemed overwhelming. Most of Southland's troubles appeared to originate with the world market or from international financial institutions. Devaluation, a measure recommended by the IMF, was surely the origin of inflation! Declining terms of trade were responsible for the balance of payments deficit. Cuts in government spending and restrictions on domestic credit were responsible for the difficulties of the FSB (and hence the 1980 food riots) and the declining utilization of industrial capacity.
The "liberal faction" gained the upper hand in 1988 by pointing to the general trend towards liberalization in the global economy and arguing that only a programme of liberalization in Southland would attract substantial foreign support necessary for economic recovery. Nevertheless, the dominance of the "liberal faction" remained tenuous. Initially, policy change was slow, little additional aid was available, and the economy headed deeper into depression. By 1990 the economy had reached crisis point. Against this background the formulation and negotiation of a satisfactory and politically acceptable PFP became critical if adequate levels of foreign assistance were to be forthcoming.
The government clearly had to act and the voice of the “liberal faction” was reasserted once more as many of the previously more “conservative” members of the PDM acknowledged that the approach taken to date was proving to be disastrous.
In 1991, under internal and international pressure, the government announced the formation of a Constitutional Commission to recommend amendments to the constitution under which a more genuinely democratic form of multi-party politics could be reintroduced. Parliamentary elections were scheduled for 1994, and would have been the first occasion on which the PDM would have to compete openly for power.
A Policy Framework Paper detailing measures to be taken with regards to macroeconomic reform and reform of the industrial sector was formulated and presented at a donor round-table in Paris in 1993. Its objectives were heavily influenced by liberal faction “ideology” and met with the approval of the donors, managing to secure an Enhanced Structural Adjustment Facility (ESAF) from the IMF and a Sectoral Adjustment Facility (SECAL) for industrial policy reform from the World Bank.
The reform process was set in motion almost immediately and initially went according to plan. 1994 saw the ratification of the GATT Agreement of which Southland was a signatory and for a while, trade policy reform topped the agenda. However, in the run-up to the scheduled elections, many policy areas were neglected as the government attempted to meet some of its donor commitments whilst actually increasing public expenditure in order to appease its electoral support base, primarily the urban population.
Drought during the 1994/1995 growing season meant that the government was unable to go ahead with the next phase of sectoral reform, in agriculture and food policy. Early action at the regional level, mainly through the SCC, along with substantial imports of food aid dissipated much of the crisis and meant that the effects of drought on the population and the economy were not as disastrous as they might have been, had resources been less efficiently mobilized. However, the government used the emergency situation as an excuse to step up government expenditure still further, with macro-economic and industrial reform slipping down the agenda.
Elections took place in 1995, following a twelve-month delay due to the drought crisis. They were described by political commentators as semi-democratic. Any manipulation of the process, as evidenced in previous elections, was at the very least, less transparent. Opposition to the governing party focused on the ‘failure’ of the incumbent to prevent the downward spiral of the economy over the previous decade and attempted to rally support from the rural poor who were voicing dissatisfaction at the direction the reform process had taken over the previous three years.
Despite this, the PDM won the election, albeit with a slim majority, due for the most part to its retention of the votes of the urban poor and the business community. These groups had remained relatively happy due to measures such as reductions in the size of the public sector and the emphasis on liberalization and privatization.
A notable development in Southland over the early part of the Nineties has been the emergence of a coherent feminist movement, organized by and drawing its main support base form the intellectual elite. Many debates concerning the status and treatment of women have been taking place. Issues of particular concern for rural women are their rights with respect to land reform, employment and access to credit. A delegation was sent to the 1995 Fourth United Nations World Conference on Women, in Beijing. Western NGOs have been providing financial support to the movement and its voice is being picked up by women throughout society. During the Nineties, various civil society organizations emerged: the Southland Commercial Farmers’ Association in 1994; the Chamber of Commerce, Industry and Agriculture in 1997; and the National Small Farmers’ Union in 1999 to name the most important ones for agriculture.
The net result of the events of 1994 -1995 was that policy reform has made much slower progress than the government envisaged. Macroeconomic performance is by no means disastrous when compared with the situation Southland found itself in during the late Eighties. Nevertheless, experts believe that it is imperative that the reform process be continued at a faster pace if yet another highly damaging economic crisis is to be avoided. The PDM, secure in its position as the democratically elected governing party, decided the dissolution of the Revolutionary Council in 1997. The party renewed with vigour its commitment to pursue its reform objectives further and formulate an agenda for agriculture and food sector reform.
Elections were held in 2000 against the backdrop of a deteriorating economy. These were felt by international observers to be genuinely democratic: no parties were excluded from registration, and the ballot process was fair. The PDM lost its majority, but still governs as a single party with the grudging backing of the PA. Certainly the government freedom of action is constrained.
As is explained in the introduction, interim assistance has been extended conditionally on the government producing an Interim Poverty Reduction Strategy Paper. Developing a strategy that will command a national consensus is a huge challenge facing the government.
