Economy can be turned around in a year – Taffs

Economy can be turned around in a year – Taffs

The Zimbabwean 24 January 2013

The President of the Commercial farmers’ Union, Charles Taffs (CT), is optimistic that with committed participation of all stakeholders and investor friendly policies in place, the ailing economy of Zimbabwe can be resuscitated in 12 months. He told Nelson Sibanda (NS) the CFU game plan aimed at putting the economy back on its feet.

NS: What gives you confidence that CFU has a pivotal role to play in the revival of the Zimbabwean agriculture sector and the economy as a whole?

CT: The proposal is meant to unlock the country’s economic asset base. Farming is the backbone of the economy. CFU has made wide consultations with other important players that will enable agriculture to supply raw materials for industry and export as well as to feed the nation. It allows rapid growth of the economy to take place without financially prejudicing the country and its people. If implemented it will restore investor confidence in the country and create a win win situation for Zimbabwe.

New farmers will be guaranteed security of tenure, access to credit and long term investor confidence. Real business will become highly competitive and highly productive. Ordinary citizens will enjoy a vibrant economy, capital gain and job creation. Supply and downstream industries will grow and thrive. Former farmers will have the outstanding issue of compensation settled and be able to invest in the economy with confidence. There will be mechanisms in place to ensure their expertise is not lost but boosted for the benefit of future farmers. Government will enjoy increased tax revenue and decreased dependence by citizens on treasury. A legacy of a successful land reform will be delivered to future generations.

NS: What will be the position with the crucial donor community?

CT: The donor community will have a minimum burden and will see enormous value for their money in any support directed to this initiative. There will be an effective means to cost efficiently and sustainably support farmers. Food security both nationally and regionally will be assured.

NS: What does the proposal look like?

CT: Firstly, government will acknowledge the debt owed to former farmers as compensation for their farms. Farm valuations will be fair and inclusive. For every title deed held by former farmers, bonds will be issued corresponding to the values of the farms. The bonds will be internationally underwritten and managed by a recognised international accountancy firm. They will be tradable, interest bearing and will be redeemable at 10 year annual instalments.

Being underwritten means that the bonds will have value and can be used as collateral to obtain loans. This will allow former farmers to invest money back into the economy. They will start new businesses and create new jobs. Those who do not want to participate can sell their bonds to other investors and move away from the process.

The issue of bonds will monetise lost value and put it back into the economy. Once bonds have been issued, the title deeds currently held by former farmers will be ceded to the land bank. These 3,500 title deeds will capacitate the land bank and will not be contested.

They will have monetary value and will be offered for sale to the current beneficiaries on the land, who will receive credit lines on cheap terms from the land bank, as land will again have collateral value and land market will have been created.

This re-energised land market will see a rise in government taxation revenues from increased economic activity as well as capital gains returns. As a result of the re-energised agriculture sector we will see the development of both the supply and value adding agricultural industry.

This will produce natural development in terms of rural infrastructure. Once value has been restored in the agriculture economy, there will be a cross sectoral confidence boost. The property rights issues will be dealt with which will boost confidence in both public and private investment both local and internationally in all sectors.

The issue of bonds will also increase mortgage value of the entire country. The land bank with initial starter financing from donors and international lending, but will thereafter manage itself sustainably without further aid. The bank will provide a revolving fund offering loans in four categories.

Loans will fall under small scale finance, short, medium and long term loans. These loans will be available to farmers but will also be available to the government of Zimbabwe to finance land reform.

The land bank, among other will fund a mentorship scheme where new farmers receiving loans will receive mentorship from former farmers in agricultural technique. In this way the national loss caused by numerous farmers leaving the land will be mitigated and agricultural knowledge of the past will not be lost. It will provide a good foundation for the future.