Sources of capital and income for communal area farmers in Kavango: Implications for agriculture and rural development

A survey based on a structured questionnaire was conducted at the beginning of 1995 to identify sources of capital and income for rural households in Kavango. The survey, which covered 80 households, revealed that there was a high dependence on external income sources. Pensions were the major source of income for the highest proportion of all households (33 per cent), followed by wages (23 per cent) and brewing (10 per cent). Other sources of income of similar importance to brewing were crop sales, non‐formal work and cash remittances.

Livestock were a minor source of income but a major source of capital and food security. Households with smaller cattle herds depended more on cattle for income and food security than those with larger herds. Cattle were a highly valued production resource that was only consumed during times of crisis and only in the absence of less valuable assets that could be easily liquidated. Grain storage was more popular among groups with the lowest income. By various criteria, female‐headed households always tended to be in the group of households categorised as the poorest of the poor. However, given sufficient income, over one third of them would purchase cattle to diversify their investment portfolio.

This article presents a number of potential strategies for improving the incomes of rural households in Kavango. These include the promotion of equitable livestock ownership and better use of the grazing resource through community management, intensification of cropping and the implementation of labour‐intensive programmes to develop rural infrastructure.     

Transactions, volume, and volatility

We show that the positive volatility-volume relation documentedby numerous researchers actually reflects the positive relationbetween volatility and the number of transactions. Thus, itis the occurrence of transactions per se, and not their size,that generates volatility; trade size has no information beyondthat contained in the frequency of transactions. Our resultssuggest that theoretical research needs to entertain scenariosin which (i) both the frequency and size of trades are endogenouslydetermined, yet (ii) the size of trades has no information contentbeyond that contained in the number of transactions.     

Growing more trees for fuelwood in the Northern Transvaal or redistribution after sustainable harvesting?

A model of the supply and demand for fuelwood within Region G is considered against the background of the plant nursery programme of the Biomass Initiative. Despite severe deficit in fuelwood supply in the homeland areas, the region as a whole could be self‐sufficient in sustainably harvested fuelwood from natural vegetation given redistribution of fuelwood from areas in the region where sustainable supply is in excess of demand (mainly conservation areas and commercial grazing areas and to a lesser extent commercial forestry plantations); an appropriate transport and distribution system; and multi‐purpose land‐use management. Redistribution would provide jobs within the neglected rural sector and the stimulus for additional industries around other natural resources. It would obviate the need for nurseries aimed primarily at encouraging rural communities to plant trees to alleviate the fuelwood shortage.     

Initial margin policy and stochastic volatility in the crude oil futures market

This article examines the relationship between the volatilityof the crude oil futures market and changes in initial marginrequirements. To closely match changes in futures market volatilitywith the corresponding changes in margin requirements, we inferthe volatility of the futures market from the prices of crudeoil futures options contracts. Using a mean-reverting diffusionprocess for volatility, we show that changes in margin policydo not affect subsequent market volatility.     

Payment system settlement and bank incentives

In this article, we consider the relative merits of net versusgross settlement of interbank payments. Net settlement economizeson the costs of holding non-interest-bearing reserves, but increasesmoral hazard problems. The 'put option' value of default undernet settlement can also distort banks' investment incentives.Absent these distortions, net settlement dominates gross, althoughthe optimal net settlement scheme may involve a positive probabilityof default.