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PDP position on agriculture revival

by Vince Musewe
10 Aug 2016 at 14:22hrs | Views
"The best way to predict the future is to create it" Abraham Lincoln

Zimbabwe's agricultural sector has long been vital to its economic stability and growth. Not only does it form the basis of the direct and indirect livelihoods of almost 70% of the population, but overall economic growth, including that of all the other sectors, is also directly linked to the performance of this sector. Agriculture must, therefore, remain a priority sector given its potential exponential impact on the rest of the economy.

Zimbabwe has about 15 million hectares of arable agricultural land, of which an estimated 4 million was bought on a willing buyer willing seller basis before the disastrous fast track land resettlement project of 2000.  

Zimbabwe also has the highest land to water ratio in Africa. This is because during Ian Smith's UDI, the government incentivised white commercial farmers to build their own dams by offering them tax incentives. As a result, we have in excess of 10,000 dams whose maintenance has been hugely neglected since 2000.

Around 11 million hectares of arable land, currently sits under the control of the government as a dead asset. Yes, a dead asset, because that land has no commercial value whatsoever. In addition, the neglect of agricultural infrastructure maintenance since 2000 has resulted in vast pieces of productive land been underutilised and their infrastructure dilapidating or stolen.

This is simply because we do not have a land tenure act that allows occupiers of that land to hold unencumbered title which would allow them to use the land as collateral to borrow funds for working capital.

The government has the sole discretion, on who can stay on that land and one can be evicted it "at the discretion of the minister" and we have seen how this has been used as a political tool.  This applies whether one has a permit, or an offer letter. The obvious consequence of this is that, nobody in their right mind is going to further invest and develop that land especially our banks.

As PDP we believe that the sacrosanct cornerstone upon which any successful economy can be built is the legal protection of private property ownership. This has been disregarded by this government in the agricultural sector to our extreme prejudice.

In order to move forward, there is of course the issue of compensation of those commercial farmers whose properties were repossessed by the government without compensation. The constitution of Zimbabwe acknowledges this liability. This issue of compensation has also been identified as a key issue which needs to be resolved under economic reforms.

The Government of Zimbabwe has, therefore, in principle accepted its responsibility to compensate land owners, subject to an agreement with the farmers on a compensation framework, and then securing the required resources.

There are an estimated 4,500 commercial farming businesses with about 5,300 properties whose ownership is disputed who require compensation. Their estimated value is in excess of $10 billion.

A compensation framework must take into account the compensation for land and improvements including the consideration of such issues as land valuation methodologies and mechanisms, land price information, the basis of levels of compensation to be paid for land and associated property acquired, interest payable and possible institutional responsibilities. Once these are resolved, compensation can then be agreed upon and paid.

The revival of the agriculture sector can be achieved by mobilising funds for compensation from the international community through a compensation model whose key objectives are;

1.    To remove the conflict over land rights;
2.    To monetise lost value inherent in the land and other assets;
3.    To ensure that the compensation is affordable;
4.    To give new farmers real bankable security of tenure; and
5.    To establish a market for land and other rural assets.
Once fair value has been established in an inclusive manner to remove the existing conflict and compensation paid, these assets can then be released to a new land tenure dispensation that is inclusive.

If we assume that the value of the assets involved is about US$ 10 billion, this will mean that when these funds can be released into the economy and they will trigger significant macro-economic recovery as follows:

1.    An increase in liquidity in the banking sector;
2.    Re-establishment of an active market for land in rural areas with an increase in bank lending to agriculture;
3.    An increase in  local private investment capital;
4.    Strengthening of property rights in the wider economy;
5.    Create funding for infrastructure and utilities development;
6.    Unleash a multiplier effect leading industrial recovery; and
7.    Trigger off new employment creation.
Above all, will be the positive impact on the economy due to the confidence that can be created and this will lead to an increased inflow of foreign investment capital in the all sectors of the economy.

A resolution of the crisis over land in Zimbabwe with the payment of fair compensation will help restore normal relations with the international community. In our view as PDP, only until the above issues have been amicably resolved can we expect a full recovery of agriculture which will trigger off overall economic recovery.

As PDP we will rationalise the issue of land ownership and tenure to ensure equitable and fair distribution of this national asset. However, that rationalisation must be underpinned by productive use of land assets and this can only happen when we reinstate the value of land on Zimbabwe's balance sheet.

Another Zimbabwe is possible!

Source - Vince Musewe, Secretary for Finance and Economic Affairs