Agriculture, Mechanisation and Irrigation Development Minister, Joseph Made

By Vince Musewe

WE all know that the agricultural sector has long been vital to Zimbabwe’s economic stability and growth.
Not only does it form the basis of the direct and indirect livelihoods of almost 70 percent 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 four million was bought by black farmers on a willing buyer willing seller basis before the disastrous fast track land resettlement programme of 2000.
Zimbabwe also has the highest land to water ratio in Africa.
This is because during Ian Smith’s Unilateral Declaration of Independence, 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 government control 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 being 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 so that they can at least farm the land.
Government has the sole discretion, on who can stay on that land and one can be evicted from it “at the discretion of the minister”.
This surely is the ingredient of the recipe for disaster.
This applies whether one has 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 will any bank lend anyone money to farm on it.
Around US$10 billion or more of land asset value sits on the country’s balance sheet, dormant and unrealisable.
Before the fast track land resettlement project in 2000, the financial services sector had around US$2 billion invested in the agricultural sector, compared to a mere US$100 million in 2010.
In addition, real Gross Domestic Product fell 40 percent from US$6,6 billion in 2000 to US$4,1 billion in 2010.
It is estimated that 350 000 rural-based farming families lost their main source of livelihoods overnight and this created massive poverty and migration from rural to urban centres that are now over crowded.
The sacrosanct cornerstone upon which any successful economy can be built is the legal protection of private property ownership.
In the agricultural sector, this has been disregarded by government to our extreme prejudice.
In order to move forward, there is of course the issue of compensation of those white commercial farmers whose properties were taken by government without reparation.
This issue cannot be avoided forever and at some stage we will have to reach some form of agreement with the victims. The Constitution of Zimbabwe acknowledges this liability.
It is clear that the conflict over land is a key element in the current economic and political problems confronting Zimbabwe.
Although the State claims that transfer of ownership has taken place for the great majority of commercial farming properties, legally this is only possible upon the final payment of compensation to the affected companies and individuals.
The Government of Zimbabwe has 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.
Such 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.

Minister of Lands and Rural Resettlement Douglas Mombeshora

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. There are an estimated 4 500 commercial farming businesses with about 5 300 properties whose ownership is disputed and who require compensation.
The total value of estimated compensation for land and fixed assets only is estimated to be between US$7 billion and US$10 billion.
Other estimates put the figure at as high as US$30 billion. 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 as being US$7 billion-10 billion, this will mean that if these funds happen to be released into the economy they will trigger significant macro-economic recovery as follows:
•An increase in liquidity in the banking sector;
•Re-establishment of an active market for land in rural areas with an increase in bank lending to agriculture;
•An increase in local private investment capital;
•Strengthening of property rights in the wider economy;
•Creation of funding for infrastructure and utilities development;
•Unleash a multiplier effect leading to industrial recovery; and
•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 all sectors of the economy.
A resolution of the land crisis in Zimbabwe with the payment of fair compensation would help restore normal relations with the international community.
A new dispensation must rationalise the issue of land ownership and tenure to ensure equitable and fair distribution of this national asset.
Vince Musewe is an independent economist. You can contact him directly on[email protected]