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Compensation following land reform: four big challenges

Paying compensation following land reform is perhaps one of the most pressing and emotive land policy issues in Zimbabwe today. Delays have caused uncertainty and limited agricultural investment, undermined trust and prevented international re-engagement. Valuation and paying of compensation needs to be dealt with urgently.

With any compulsory acquisition – whether through land reform, or through expropriation for mining or urban development in communal areas or from freehold land – comes the responsibility to pay compensation, and the associated liability is taken on by the state. This is formally acknowledged in Zimbabwe’s new Constitution, but the practice of compensation in Zimbabwe has been found wanting.

Beyond the importance of political recognition of this as a priority, there needs to be a set of practical responses that help build trust between the different parties. This blog is one of an occasional series (for example, here) on priorities for the new Zimbabwe Land Commission, established by the Constitutional settlement. Here are four important challenges around compensation.

First is the methodology for valuation. The Constitution, agreed across political parties, specifies the obligation of the state to pay for ‘improvements’ (and only for land held under investment treaties). This is reiterated in the Zimbabwe Land Commission Bill. However, given the delays in implementing the approach there are many disputes about how such improvements are valued, and what improvements constitute, and who is responsible for them. This results in wildly variant estimates of the total liability, with the ranges of US$2-10 billion being presented. However there are fairly standard approaches to valuation available, and much international experience for dealing with different types of valuation, and depreciation including in volatile currency environments. Key outstanding issues relate to how responsibilities for compensating given ‘improvements’ are allocated. For example, a dam may be both a public and private asset – with water ‘owned’ by ZINWA, the dam infrastructure by the farmer, and the use of the water spread amongst a variety of users in a catchment.

Second is the state’s capacity for valuation. Here there remains wide dispute about appropriate methods, and the scope and comprehensiveness of the existing valuations as well as capacity to conduct and validate them, while maintaining a reliable assets database. The pace of official valuations is a real problem, and parallel initiatives have emerged. To date the government’s response has been piecemeal and slow, with individual farms being processed in ways that does not result in an overall strategic response. At current rates, it would take over 20 years for all farms in the country to be valued to allow compensation to be paid. Limited staff are available in the Ministry of Lands for valuation purposes, and equipment is limited and outdated. Mechanisms for self-financed surveying were proposed by the Minister of Finance in 2014, but private surveyors must work closely with government for such surveys to be accepted. This is not yet the case with valuations. There are major capacity constraints in implementing the process that need urgent attention. Formally transferring tenure, paying compensation and formalising new uses through leases or permits has to happen in one go, as new investments and funding flows are often conditional on all aspects being addressed.

Third is the process for dispute resolution (see next week’s blog). This requires clarification of the administrative process and the rights to recourse. The proposed Bill helps in this regard. Notice and gazetting is required, followed by a process of valuation and the option for arbitration in an administrative court. However while the procedure is specified the capacity to implement this in a way that all parties trust remains open to question. Given the importance of speeding up the process (and so likely increasing the number of disputes needing speedy resolution), there is a clear need for a time delimited administrative solution to deal with the process. The establishment of a specialist tribunal under the Land Commission, may alleviate capacity limits and improve the process’ transparency and legitimacy. Current provisions for dispute resolution are clearly inadequate.

Fourth is the funding of the process. In the context of the on-going fiscal constraints of the Government of Zimbabwe, there is limited capacity to pay for compensation, even if there is a willingness to do so. There is therefore a need to disaggregate the liability and define a series of mechanisms for paying it off. Improvements may include private goods acquired by individual farmers (such as farm machinery, buildings, irrigation equipment etc.), public productive goods (such as wider infrastructure, including roads, dip tanks, dams and so on), and public social goods (including those buildings now converted to schools, clinics, government offices/accommodation, trading centres). This is particularly the case on A2 land, but may relate to public housing for former farm workers on A2 land, as compounds are converted.

There is a clear assumption that land reform farmers will contribute through land rentals, and the purchase of some of the assets found on their farms with A2 farmers paying substantially more than A1 farmers. However, given the public developmental benefits of land reform, the state and development partners can be expected to pay for public productive and social components, including as part of debt clearance and development funding arrangements. The Bill establishes a Land Fund through which this can operate, and provides a channel for investment by development partners in public good/developmental aspects, so as to ensure a fiscally feasible response, given current constraints. In turn, a key challenge will be to ensure revenue flows from new farms are sufficient to pay rentals and so contribute to the fund to pay compensation. The fiscal sustainability of the process for both farmers and the state is crucial, and argues for a speedy resolution so that compensation is paid, new ownership and finance arrangements are established and farms increase productivity to pay contributions – together with the state and other development partners – in order to pay off the liability within a reasonable timeframe.

In order to speed up the process, there is an important imperative to boost capacity for implementation and financing. This requires a one-off effort, together with the establishment of a longer term system. The enhancing of survey and valuation capacity in the Ministry of Lands and the Surveyor General is a priority, together with the establishment of an independent Land Tribunal (operational for a time-limited period, say two years) under the Zimbabwe Land Commission to hear dispute cases, and deal with these swiftly, without them clogging the court system, and overwhelming administrative capacity.

Novel approaches to financing are required that see addressing the outstanding liability from land reform as part of debt restructuring and refinancing of the productive economy. Disaggregating the costs into private and different types of public cost will clarify who has to pay what, and this can be managed through an integrated system under the proposed Land Fund, involving all parties – private farmers, banks/financiers offering loans/mortgages, the government and development partners and international banks/finance institutions.

Ensuring a swift move from acquisition to valuation (via dispute resolution if required) to compensation and then issuing of leases or permits is crucial. This must be a central part of any land administration system for the future, and the backlog created by lack of action in the past 17 years must be dealt with urgently. Issuing of leases, for example, will allow for security of tenure and so potential for new financing, and then payment of rentals which in turn will replenish the Land Fund. Paying compensation must be seen as part of a wider strategy for refinancing the economy and increasing its productive, developmental potential, as well as addressing outstanding debts – including around land – is part of this. This is an urgent, and long overdue, priority.

 This post was prepared by Ian Scoones and appeared on Zimbabweland. It is part of an occasional Zimbabweland blog series on priorities for the new Zimbabwe Land Commission.

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The MDC-T’s Agenda for Real Transformation (ART): why the land and agriculture sections need more thought

A few weeks back, the MDC-T organised a policy conference to discuss their new 247 page policy document, ART – the Agenda for Real Transformation. There is much to commend in this document, and the commitment of the MDC actually to discuss policy is heartening. There has been a serious dearth of policy discussion across the past decade, and this is a valuable attempt to get to grips with some of the really pressing issues any government will face. In a pair of Hot Seat radio interviews with Violet Gonda, Tendai Biti, the MDC-T’s Secretary General and current finance minister in the GNU discussed the contents (listen or review transcripts here and here).

The overall vision is “a modern, healthy, functional, integrated democratic developmental state with a vibrant, socially just green economy that takes pride at leaving no one behind”. No complaints with that. Equally, the sections on security sector reform, mining revenues, industrial cluster development, strategic infrastructure investment, social services and more are all good contributions. But sadly the sections on agriculture and land are rather poor, suffering from a combination of inconsistencies, confusions, inaccurate data and poor analysis. Why is it that after so long (the policy has taken apparently two years to produce, based on consultations across the country, page 2), the MDC has not been able to get to grips with the agriculture and land, and come up with a more coherent policy position?

I guess it reflects the lack of capacity and the background of the leading players. Tendai Biti himself is a lawyer, and not versed in issues of agronomy or land administration, while other leading lights, Morgan Tsvangirai included, come from an urban, labour union background. Those with a rural brief include Eddie Cross, whose view on private property is informed by right-wing think tanks such as the Cato Institute with which he has been associated, and Roy Bennett, who comes from a commercial farming background, and does not seem to recognise the potentials of the land reform. There are of course other lobbyists and funders in the local and international community who continue to be committed to a reversal of the land reform, arguing that it has had few if any benefits. So anyone trying to draft rural policy for the MDC is severely handicapped by these limits and competing pressures.

What then does the policy say? I am not totally clear of the document’s status, as it does not appear on the MDC website, so I presume it remains a draft. If the number of typos that are present is anything to go by, I assume this to be the case. So accounting for this provisional basis, what can we glean?

First, and significantly, the document incontrovertibly states (again) that the land reform is not reversible. It also sets out some laudable principles for a land policy, including: equity in access and distribution; efficiency in its utilization; accountability in its management; transparency in the conduct of its governance; legitimacy in the eyes of the Zimbabwean public; participation by Zimbabweans of all classes, gender and ethnic backgrounds and security for all who make their living from the land. Overall, the policy aims to create “a new order of economically viable, market-directed commercial farmers, with the family farm as the basic model”. All good, sensible stuff.

However, it then goes on to characterise the process of land reform after 2000 (again) as chaotic, with poor outcomes, using the standard international media narrative, with little acknowledgement of the research that has shown a more complex story. This in turn frames the document. For example, on page 44:

“After 10 years of chaotic land invasions and the illegal dispossession of the majority of commercial farmers, only a tiny proportion of the target of 8 million hectares has been lawfully taken over and the rest lies largely deserted and unproductive. The farms have been taken over by a political elite that has been unable to maintain production and has presided over the decimation of the capital infrastructure that had existed on the farms prior to the FTLRP….As a consequence agricultural production has declined by nearly 80 per cent, exports have plummeted and nearly 70 per cent of all foodstuffs are being imported. Some 400 000 farm workers have been displaced with their families plunging nearly 2 million people into destitution and homelessness”.

Here in a few sentences are all the myths we highlighted in our book presented in condensed form: that the reform was ‘chaotic’ and solely instrumentally led by ZANU-PF, the land lies largely idle and unproductive, that only the elite cronies have taken over, infrastructure has been decimated and that production (in general) has collapsed, with two million people being projected into destitution and homelessness due to farmworker displacement. All of these statements are not based on the accumulating evidence. The pattern is variable, but there are some clear trends, now from numerous studies, and this sort of statement, that frames the overall response, just does not add up.

Having set this (inaccurate) picture up, the policy proceeds to outline what the responsibility of an MDC government should be: essentially to reverse this (bad) situation. There is the usual list of things to do, including infrastructure development (notably irrigation), fertiliser and input supply and new technologies (including genetically modified crops). There is a modernising zeal to the narrative – new technologies and investment will come to the rescue. In a Tony Blair style incantation, Biti in his Hot Seat interview identified a key solution as “research, research, research”, and claimed that maize would soon be produced at 12-15 tonnes a hectare (even under a MDC government, somewhat unlikely!) Many of the suggestions (especially small scale irrigation) are sound, but of course this perspective fails to address the past critiques of top-down, technology-driven modernisation of agriculture, from the Native Land Husbandry Act onwards – see for example the work of Jos Alexander or Mike Drinkwater, among many examples.

More importantly, the document fails to develop a vision for land and agriculture that takes the new agrarian structure into account. Framed in terms of righting the wrongs of the Fast Track process and providing a technical solution, rooted in a market oriented approach, it does not examine how small, medium and large scale estate agriculture might operate together and how a territorial, regional approach might contribute to integration, adding value and generating multiplier effects. The AFD/DBSA report of last year offers some sensible pointers that could have been taken on, as does the most recent World Bank report on agriculture, and of course we offered our own suggestions based on a decade of work in Masvingo in the final chapter of our book (for a summary, see the blog next week).

Where the document is accurate in its assessment is in its commentary on wider industry connections and economic linkages. It notes:

The [fast-track land reform] programme failed to support the newly settled farmers with skills, equipment, finance and marketing opportunities….this had serious ramifications for the entire economy as backward and forward linkages ..Consequently, this had multiplier effects on agro-based industries..

The document proceeds to identify the importance of off-farm linkages:

“the MDC government will protect the people on the land, while it develops complementary strategies for non-farm economic activities that tap into agriculture.” (p.50)

These are important commentaries, although without much detail of how it will be done in the context of the new agrarian setting. The agriculture section of the document, does not really engage with this at all, simply listing types of intervention, without an overall strategy.

Overall, the policy’s framing is very much one centred on macro-economic restructuring, and economic growth. While positioned in terms of a ‘developmental state’ argument (one of Biti’s familiar refrains), the details seem more old-fashioned Washington Consensus – get the market fundamentals right and all will follow (there is much talk of ‘market flexibility’, ‘opening up for business’ and so on). That this approach has been so massively discredited seems to have passed the drafters by. It may be appealing to the international community, including potential donors and investors, but will it work, and perhaps even more significantly will it be acceptable to a population already starkly divided by haves and have nots, and having suffered years of financial mismanagement – from ESAP to Gono’s casino economy? This contradiction was not lost on the Secretary General of the Zimbabwe Congress of Trade Unions, Japhet Moyo, who launched an attack on the document at the conference, something that clearly did not please the party hierarchy.

The free market ideology that Moyo objected to also pervades the discussion of land, particularly around tenure. The policy announces a programme of what Biti terms ‘giving title’ in his Hot Seat interview transcript: “Number three, give title, give title to everyone who owns land right now. Give title, Zanu PF is refusing to give title even long leases because it is using land as a political field”. But it’s not at all clear what this really means, as while the document refers to the intention “to design and universalize a system of tenure” (p. 48) across all land categories in order to deliver, it argues, security of tenure, opportunities for collateral and so on, in other sections there are commitments to some form of village tenure in communal areas, leases in resettlement lands and freehold tenure elsewhere.

Underlying this all is the familiar argument about the importance of private property rights (title, title, title). This has of course been long challenged, both in Zimbabwe and beyond. There is no strong evidence that there is an automatic causal relation between private property rights and economic growth and investment, despite the influential arguments of de Soto and others. Instead the relationship between property rights, investment and economic growth is much more complex, and is conditioned by wider factors, such as political stability, the investment environment, local institutional arrangements for land access, and so on. Embarking on expensive cadastral surveys and land administration exercises is very often a big mistake, as study after study has shown. There are plenty of other routes to the same end that are more effective and cheaper. As Professor Rukuni (and many, many others) have long argued, a differentiated response is required that accepts multiform tenure, but does not go down the risky route of mass land titling.

In other areas, there is confusion too. The policy position on compensation seems to contradict the newly agreed Constitution, by arguing that compensation must account for not only ‘improvements’ but the land itself, across all areas, and not just investment areas (BIPPAs). It’s not totally clear in the document, but Biti in his Hot Seat interview, seemed to confirm this impression. Equally the policy suggests leases will be issued in A1, A2 and old resettlement areas and “leaseholders will be required to contribute to the payment of compensation to the original owners in order to legalise such arrangements” (p. 54). Despite the very sensible formula propounded by Professor Rukuni again, and largely agreed by key stakeholders, the MDC seem to have backtracked on this, opening themselves up to a long and protracted process that will be difficult to resolve sensibly. This strikes me as a big mistake, as most players want a quick resolution to this crucial issue, with compensation paid swiftly on the basis of a clear formula.

Other areas of land policy repeat existing policy, and the Constitutional provisions, including allowing for land ownership by all Zimbabweans, whatever their racial origins, the requirement for a land audit, the establishment of a Land Commission, a restriction on maximum farm sizes and a limit of one farm owned per person. All of this is at least notionally accepted by all actors. The challenge for an incoming government will be to implement these provisions, and it is good that the MDC-T is committed to doing so.

If the document is a draft and discussions are ongoing, then there is a chance presumably to debate, adapt and change the document. It is good that it is out in the open and can be subject to scrutiny. Indeed it is the only policy prospectus from across the political parties that is available. However, it does need some serious further thought.

This post was written by Ian Scoones and originally appeared on Zimbabweland

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Whose law counts? Legal contests over land in Zimbabwe

Much of the land debate in Zimbabwe has centred on a number of high profile legal cases. The most prominent of course is that brought by Ben Freeth and his late father in law, Mike Campbell. The SADC tribunal ruled in their favour, but the decision was rejected by Zimbabwe and the tribunal was disbanded, and is unlikely to regain significant powers despite a high profile campaign led by Desmond Tutu to have it reinstated.

So whose law counts? National, regional or international, and which courts can adjudicate on what? This is a fairly profound socio-legal conundrum, debated widely by those concerned with legal pluralism and the relationships between international law and national jurisdictions. The Zimbabwe case is thus far from new, but it is important, given the importance laid on ‘the rule of law’ as a building block of an effective economy and democracy. And more pragmatically, resolving the outstanding legal disputes over land ownership must be achieved, if Zimbabwe’s agricultural economy is to move forwards.

In a piece contributing to the Sokwanele land debate, Dale Dore argues that the last decade or so has seen an abrogation of legal principles by the Zimbabwean state, with laws made and broken seemingly at will. Certainly the flurry of legislation on land that has appeared justifying, usually post hoc, state actions is witness to this pattern. Whether the issue is compensation or compulsory acquisition, then a new law to suit the current situation was presented. Of course, the argument runs that this is what elected law makers do, and they are perfectly in their right to do so.

The question though is whether justice is being done, or whether this represented arbitrary, biased law making of the worst sort, without any underpinnings of natural justice. This is certainly Dore’s main argument in his two-part contribution. And he clearly has a point. Following the rejection of the constitution in the 2000 referendum, the President insisted on inserting an amendment (no 16) allowing for compensation only for improvements, and while the High Court regarded the land invasions as ‘illegal’ in 2000, by December 2001, the Supreme Court ruled that Rural Land Occupier (Protection from Eviction) Act, giving rights to land invaders, was lawful and in line with the constitution.

Clearly the law was a mess, and added to that the intimidation and clear political manipulation of the judiciary made much of this a sham. But to suggest that the law and politics and social processes, particularly in times of rapid change, are always separate is also inaccurate. Laws must reflect broad political choices, and more generally the people’s will. If this was not the case, we would be stuck (as we often are) with laws that are outdated, regressive and anachronistic. New laws must though, as Dore argues, reflect the basic principles of fairness, natural justice and so on, but they also must be realistic and pragmatic, and appropriate to the social and political context of the time.

Probably the best way of resolving the detail is to look to the bigger picture. And this is where a Constitution can help. If this is agreed and broadly accepted, this can become the basis on which laws can be assessed. On land, the draft constitution, which of course is still being wrangled over, is quite clear on land, supporting the 2000 position on compensation, and recognising, as the GPA did, the irreversibility of land reform. The published draft has been accepted by the MDC, although Zanu PF continuing to bicker over other aspects. It seems that the land provisions are not part of this on-going wrangle.

This is not to say that there aren’t those who object. In a recent Financial Gazette article entitled, “Draft constitution displeases displaced farmers”, the piece reports on the position of the CFU and the views of Agricultural Recovery and Compensation manager Ben Gilpin, arguing that “The predicament of the former commercial farmers continues unabated as the draft constitution has failed to address the issue of compensation, stripping them of their rights to fair compensation as indigenous Zimbabweans”. The CFU has yet to respond formally, but others have indicated that they will continue the struggle for full rights and compensation elsewhere. Ben Freeth has criticised the MDC, saying that they are misleading people by accepting the draft.

If the Constitution is agreed as currently framed, then these more radical claims will have less force. Yet, Dore argues that the draft constitutional provisions are “conspicuously at variance with international law and offend natural justice”. But this claim can be disputed. International law is not clear on land compensation, and compensations for improvements only is an accepted mechanism elsewhere, and probably the only feasible one for Zimbabwe. As for natural justice this rather depends on the wider consideration: clearly land reform was redressing longer term injustices due to colonialism, and striving for equity through redistribution must be seen as a commitment to justice too. Balancing individual human rights and narrow legal provisions created in another era, with wider commitments to rights, justice and redistribution is not easy, and in the end is a societal and political judgement. Overall, a national political consensus is clearly required on the land issue, and this will require compromises. Holding out on the basis of arguments around the ‘sanctity’ of private property is insufficient, and recourse to an individualistic rights discourse, ignoring the wider social-political context is also inadequate.

What then is the way out of this bind, where, as in the Sokwanele debate as in wider political discourse, the two protagonists talk past each other? A first step must be a new legal framework, based on a democratically agreed Constitution, must be the way forward. Let’s hope that the referendum takes place and that this can form the basis of this, leaving behind the arbitrary manipulation of the law that has characterised the recent past.

This post was written by Ian Scoones and originally appeared on Zimbabweland

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Compensation for land

In an important piece in the on-going Sokwanele debate on land entitled “The significance of land compensation for rehabilitation of Zimbabwe’s land sector”, Professor Mandi Rukuni, former chair of the Zimbabwe Land Tenure Commission and professor of agricultural economics at UZ, offers his thoughts on the compensation issue. As ever it is a measured, pragmatic stance and one with much merit. He makes a number of key points and maps out a way forward. It is worth summarizing the highlights.

He points out that existing legislation (from 2000) allows for compensation for ‘improvements’ only. This has been confirmed in the still-disputed draft Constitution, suggesting at least that the MDC agrees with this formula, although the Constitution allows for full compensation including for land for those farms governed by investment treaties. Around 125 farmers settled on this basis in the early 2000s before hyperinflation kicked in. Now others are contemplating this, among the former owners of the 1250 farms that have been surveyed and valued. Thus since the Fast Track programme, 210 farmers have been compensated for improvements. Compensation values which have been paid out vary from about $200,000 to $1.2 million, according to Rukuni.

But what would the total cost? In order for the agricultural economy to move forward and for investment to flow, with confidence once again being restored, dealing with the compensation issue is a priority. Under the existing law, compensation and so ‘quittance’ must precede the issuing of any new lease. Without compensation then, especially for the larger A2 farms, lease arrangements are impossible, resulting in continued insecurity for existing farmers.

According to government, the total settlement bill on this current basis would be US$1.5-2 billion. However, the Commercial Farmers’ Union disputes the legislation, arguing that compensation values should include land, improvements, interest and consequential damage. They estimate the total would come to between $6 and $10 billion. Clearly there is a big gap between the estimates. What then is a pragmatic solution? The fact that the government is serious about compensation is clear from the budget allocations up to 2014, over which period some $30 million has been earmarked for compensation. This is clearly not enough, and other support, including from the international community will be required, to resolve this. So, what else needs to be done?

Rukuni identifies two things for immediate action. First, valuations must be speeded up. Currently over 5000 properties still need to be properly valued, and if valuations are disputed, they must be dealt with in the Administrative Court. Second, a Land Acquisition Compensation Fund needs to be set up to allow swift and complete payment of all compensation. The fund would be made up of contributions from the national budget, contributions from international donors and development banks, and from transfer fees and ground rents from A2 farmers once leases were issued.

Above all, Rukuni argues for a pragmatic and flexible process. While there are some who will stick out for a full settlement and will continue to pursue this in any court that will hear them, there are many others – perhaps the majority – who want an end to the uncertainty. For many the economic collapse, as well as the loss of their farm assets, has resulted in severe hardships, very often in a vulnerable period of retirement, given the age profile of most former white farmers.

Rukuni comments, showing his frustration with all sides: “…frankly the country needs a more proactive leadership from both government and organized farmers on this matter. It is better for government and farmers to face donors with a negotiated position than the current huge gulf in positions”. In other words, he suggests, until there is a sense of joint movement on this donors, whose budgets are being squeezed in any case are unlikely to touch the politically charged prospect of compensating a few thousand white former farmers, prioritizing them above other perhaps more pressing humanitarian and development needs in the country.

Yet for the country to move forward some compensation deal, at least for the majority, is essential. This must emerge from a national consensus, driven jointly by former farmers and the inclusive government. This must represent a reasonable, not a maximum, claim, more likely in the ballpark of the government’s estimate. My personal view, expressed in an earlier blog, is that, rather than expecting the constrained national budget and aid budgets to bankroll this, any compensation settlement must be wrapped up in a deal around national debt. Yet sadly on this too, there remains little consensus. So, while the administrative and legal mechanisms for resolution exist, the political commitment from key players must be there too. Sadly, this may still be something that has to wait until a new political settlement is reached, hopefully in the next year, with a new agreed Constitution being the basis for moving forward on this thorny consequence of the land reform.

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Dealing with the national debt – and farm compensation

Zimbabwe has a massive national debt. This is currently estimated to be $7bn. If Zimbabwe is to gain the necessary support from international finance institutions, commercial lenders and others, it has to deal with it. Of course some debt is perfectly acceptable, but it has to be serviced, and with debt exceeding GDP this is difficult, as debt servicing takes up too much government revenue. And of course when debt is not serviced, then confidence in the economy plummets and investment does not flow. It’s a catch-22: ask the Greeks, Irish or Portuguese – and even the British and Americans.  Dealing with the national debt is therefore crucial to national recovery.

With the catastrophic economic collapse through much of the 2000s, exacerbated by appalling fiscal discipline and accelerating hyperinflation to early 2009, the economy was in a real mess. So all credit to Tendai Biti in his role as finance minister for getting things back on course. The change in currency (abandoning the Zim dollar) was critical, but so have other measures. Growth is estimated to be 9%, and investment is flowing back into the country.

So what should be done about the debt? This a crucial element of longer term recovery, and will allow government financing of key areas. Rebuilding the agriculture sector following land reform is a vital task, but without funds recovery while positive is much, much slower than it might have been. If compensation for land improvements is rolled into the debt estimate (currently estimated at $3bn for a full settlement), then payouts to those (white) farmers who lost land through the land reform could be managed, as part of the debt settlement. Some of this could be paid back, with one suggestion being that A2 farmers pay 30% of the cost upfront into a fund, and the remainder is paid off over time as part of land taxation.  Payments for A1 farms are less likely and so would have to financed separately. Such a solution, as part of a debt deal, would unblock a whole range of issues in the agriculture sector, allowing security of tenure and investment to flow again. The wider political-diplomatic dividends would be substantial.

There are two views as to what to do about the national debt. A Jubilee Debt Campaign report reviews these options, and lays out the pros and cons. One option argues that a local solution should be found, whereby minerals revenues (which are large and growing) should be channelled towards debt write-off and external financing should come with no (or few) strings attached. When Zimbabwe’s economy was at its low point, China continued to provide (tied) finance – for the fertiliser and tractor programmes of the Reserve Bank, for example. China’s banking and loan finance arms are now widespread across Africa, and very active in Zimbabwe. But is this enough, and will the minerals tax take flow as smoothly as suggested towards debt repayments?

Another view is to go for an international debt write-off under the HIPC (Heavily Indebted Poor Countries) mechanism. Under an international deal, the compensation issue could be incorporated and calculated as part of the HIPC deal. However, this would require adopting IFI conditions, and undertaking a poverty assessment to show that reform could be directed to poverty reduction. This is a route a number of African countries have gone down, including some now doing rather well, including Zimbabwe’s neighbour, Zambia.

Some argue though that the HIPC route would be disastrous. Those making this case – as ever in Zimbabwe is a strange combination – include hardline ZANU-PF politicians who argue that this would undermine national sovereignty and debt relief campaigners who are worried about the conditionalities that would be attached. Should Zimbabwe suffer another ESAP period, just as things are looking better?, they ask. The Jubilee Debt Campaign report argues:

“The Zimbabwean story highlights many dangers of basing economic development on the use of foreign loans. We support calls for poverty and inequality to be reduced primarily through mobilizing domestic resources and reducing the outflow of resources through illicit flows, tax avoidance and multinational company profits, as well as debt repayments”.

The report argues against an immediate debt relief solution. Instead they argue that a first step must be a full debt audit to see who paid for what in past debt. While it is important that both the processes of taking on debt and writing it off should be clear, transparent and accountable, it is not that clear to me at least what the benefits of uncovering the rights and wrongs of all loans since 1980 would be.

In the report a number of different past loans are highlighted. For example, the World Bank financing of the Forestry Commission in the 1980s is offered as a case of a ‘bad’ loan. The returns were not significant and the money was wasted it was suggested. Having been involved in forestry debates in this period, there is plenty to critique, but I am not sure that a World Bank loan was irresponsible, as the Commission was trying to regear itself to serve the whole country and had to concern itself with fuelwood and trees in the communal areas.  Another example is the sale of land rovers to the Zimbabwean army. But again remember in the 1980s, the UK provided much support to the creation of a professional army following the war. All of these ended up with the racking up of debt.

But these were perhaps not the main economic misdemeanours that have led to the current crisis. This had its origins in the structural adjustment programme, and then a series of politically driven decisions which led to reckless fiscal indiscipline (from the war vet payouts to Gideon Gono’s frenetic printing of money), and a massive growth in corruption, linked in particular to minerals revenues.

While arguing for transparency and accountability in future financial dealings makes much sense, a long drawn out audit of the past probably doesn’t, particularly if it delays yet further resolving the debt issue through a negotiated HIPC route (a solution which, while problematic on some counts, is definitely not all bad in my view). And there is no time to lose. The lack of finance in the Zimbabwe economy over the past decade has limited recovery and created poverty. As argued elsewhere, a lack of economic recovery also stymies democratic renewal. Addressing the debt issue must be a priority therefore. And, if linked to dealing with the resolution of the thorny compensation issue, then an array of tenure, finance and security issues can be dealt with in the agriculture sector, releasing the full growth opportunities of the land reform.

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