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Zimbabwe, reviving agriculture is the only way out
November 05, 2012
revival in Zimbabwe is the trigger for creating a virtuous cycle
of wealth creation not only in Zimbabwe, but in the SADC region
as a whole.
Let me begin by beseeching my patient readers to forgive me for
a rather longish article. The subject matter herein is of national
importance and security. It therefore requires that I dispatch my
thoughts on it in one sitting for your benefit. Kindly tolerate
It is unbelievable
when you begin to appreciate the opportunity in and the potential
of Zimbabwe-s agricultural sector. I say opportunity because,
you simply cannot imagine the value which we are currently sitting
on, and how quickly we can correct the prodigious blunders of ZANU
(PF). The unintended consequences of past actions based anger and
political expediency, like a nightmare, continue to linger in our
brains and truly arrest the potential of our country. It-s
time to be proactive.
about 15 million hectares of arable agricultural land, of which
an estimated 4 million was bought by serious black farmers, on a
willing buyer willing seller basis before 2000. Around 11 million
hectares, currently sit under the control of our government as a
dead asset. Yes, a dead asset, because that land has no commercial
value to anyone whatsoever.
This is simply
because; we do not have a land tenure act that allows occupiers
of that land to hold unencumbered title and use that as collateral
to borrow funds for working capital. The government has the sole
discretion, on who can stay on that that land and you can lose it
"at the discretion of the minister". This applies whether
you have a permit, or an offer letter for any piece of agricultural
land in Zimbabwe. The obvious effect of this is that, nobody in
their right mind is going to further develop that land, nor is any
bank going to lend anyone money to farm on it. Around USD10 billon
or more of value, sits on the country-s balance sheet, dormant
Now let me put
it simply, imagine you have a title deed to the land on which you
have built your house, and the state walks in and says; "Hey
this land does not belong to you anymore so move off but don-t
worry, we will pay you for the developments that you have done in
the future at a value which we deem fit. Unfortunately we don-t
have the money now, so you are going to have to wait." Of
course, this is regardless how you may have acquired that land in
the first place or, and in the case of farm land, whether you had
made some improvements or are just about to harvest a crop that
you invested your lifetime savings in or borrowed funds to do so.
Overnight you are evicted and, you are worth zero. Now that is traumatic.
If you had borrowed
money from the bank to build your house, to make improvements or
to buy inputs, it would mean that the bank that lent you that money
ends up with nothing and you too end up with nothing plus incredible
stress. Now you tell me which bank, local, indigenous or international,
would lend money to anyone who is in farming? What framer would
continue to invest his time and money in such a situation? The consequences
are that; in 2000, the financial sector had around USD2 billion
invested in the agricultural sector, compared to a mere USD100 million
in 2010. In addition, real GDP fell 40% from $6.6 billion in 2000
to $4.1 billion in 2010. It is estimated that about 2 million families
employed in the sector lost their jobs and livelihoods. Surprised?
that, you are an international or local investor, who is looking
for an opportunity to invest in; would you invest in property or
any asset in a country like that? Would you also consider investing
in a country where companies are being taken over in almost the
same manner, without even the new owners paying fair value or having
the competence to manage and grow the company? You would not only
be insane but downright stupid to do so.
cornerstone of free and profitable enterprise upon which any successful
economy is built namely; the legal protection of private property
ownership has been disregarded to our extreme prejudice. That is
our fundamental problem.
For the benefit
of my black South African brothers and sisters, who are now baying
for the same "Zimbabwe solution" and taking over what-s
"rightfully theirs", let the inevitable consequences
of their aspirations be evident herein;
move out or go elsewhere, land and property values will collapse
and the economy will experience a serious contraction. Industries
will close, unemployment will increase and liquidity will dry up
while inflation will increase, especially if the country decides
to print money since it can no longer borrow from any bank anywhere.
Any individual with any savings or investment will be ruined, as
happened to millions of pensioners, insurance policyholders, asset
managers, currency speculators and others. The banking sector will
collapse as loans to the agricultural sector become unrecoverable.
The impact is catastrophic. Overnight, we wiped off billions of
US dollars of value from the country-s balance sheet, and
caused unprecedented trauma to every Zimbabwean, black and white.
interrelated consequences are NOT as a result of sanctions or a
devious conspiracy by the West. They are the workings of simple
economics 101 ignored. We created our own spider- web and
remain caught in it up to today.
I am reliably
told that, before 2000, for every USD1 invested in agriculture in
Zimbabwe, USD3 was invested in related and downstream industry.
Meaning that; the potential "multiplier or knock-on effects"
on the economy of investing in a stable and viable agricultural
sector, underpinned by a land tenure act that respects private property
have since disappeared to our disadvantage.
Let me be very
honest: without correcting the devastating past mistakes ZANU (PF)
with regard to land ownership redistribution (to use a civilized
term) and now indigenization of private companies, our economy will
never recover. That is the inconvenient truth that we must all accept
regardless of the color of our skin or political leanings.
For the benefit
of my tolerant readers and detractors alike, please note that, I
am neither supporting the racially skewed ownership of land which
we inherited at independence, nor am I disrespecting the purpose
of the armed struggle and the sacrifices made by all during that
time. I certainly do not support the skewed ownership of land by
black Zimbabweans, where a select few pick and choose multiple lucrative
land assets because they are ZANU (PF) praise singers. Especially
where there is no demonstrable evidence of their ability or a keen
interest to use that land to the benefit of the country and ensure
our food security and employment creation.
I agree with Mugabe on his principle that ALL black Zimbabweans
must own and manage a majority stake of agricultural, mineral and
industrial assets. The problem is the methodology being applied
to achieve that objective and the hyenas and vultures that are circling
to our land ownership conundrum for me is very straightforward.
We must revive these dead assets first, by ascertaining their fair
value through a land audit and compensating the holders of the title
deeds for the improvements they did on the land. This must be independently
ascertained and if necessary, arbitrated upon. That is the right
thing to do, despite our anger and the harshness of our colonial
Second, we must
then fund the "ownership" of this land by new black
farmers, who are committed and experienced, and who comprehend that
farming is neither a part time national hobby nor is it about boasting
on how many farms you have in a pub conversation. Third, we must
create value by having a land tenure act that allows the new farmers
to borrow against the land they occupy. Lastly, we must capacitate
the new farmers, and draw the expertise of experienced white and
black farmers, so that we can accelerate the productive capability
of this dead asset, within the shortest possible time.
There are billions
of funds awaiting their entry into Zimbabwe and all they need is
our serious attention to the above matters. We must take responsibility
and all work hard towards creating a stable and democratic political
If we do that,
we would have suddenly created value on the country-s balance
sheet and we will certainly see international financiers coming
back. Property and asset values will increase (including commercial
and residential property.) This would mean that we can further create
access to new credit for all property owners, related industries
and then some.
which is hugely dependent on agriculture, will begin to recover;
employment will improve so will liquidity and therefore, disposable
incomes in the economy. On top of that, Zimbabwean blacks will now
own a significant and productive portion of the economy in agriculture
and related sectors. We will be able to feed ourselves and the region
once again. We would have triggered a "virtuous cycle of wealth
creation" to the benefit of not only Zimbabweans, but the
SADC region as a whole.
is therefore the "red button", for re-launching the
Zimbabwean economy into the stratosphere.
enough, I explained this to my fourteen year old son the other day
and he simply said: "Wow dad, it sounds quite an obvious and
simple solution, why isn-t it getting done?"
the crooked timber of humanity", I answered him, "no
straight thing was ever made." (Quoting Immanuel Kant, the
I must also quote Albert Einstein, as I often do, that "The
significant problems we face can not be solved at the same level
of thinking we were at when we created them."
out there; are you hearing what I am saying?
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