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Land and compensation in Zimbabwe: frequently asked questions

The debate about compensation of former white farmers in Zimbabwe continues to rage. The compensation agreement signed in July agreed a total amount of US$3.5 billion to pay for ‘improvements’ to the land that was expropriated. After 20 years of discussion, this was a major step forward. However, there seem to be multiple positions on the agreement and little consensus, along with much misunderstanding. However, some things are happening, and a joint resource mobilisation committee has been established with technical support from the World Bank and others.

Since my earlier blog on this subject, I have been asked many questions. Below are some of the frequently asked questions, and the responses I have offered (sorry, a bit long, but it’s complex). Although there are many remaining doubts and concerns, it remains my view that now is the time (tentatively and carefully) to move forward.

How is the money going to be raised? This is the big one. All sorts of ideas have been floated, but given the state of Zimbabwe’s economy and the lack of trust in the current government, it’s going to be tough. Some significant moves towards the demanded political reforms (also central to the Constitution) will be a prerequisite for any substantial debt deals with the international financial institutions. And with the whole world in debt and with economies depressed due to the impacts of the COVID-19 pandemic, this is not a good time to raise such amounts of money, even with novel bond instruments being suggested by some. However, there are other routes to paying off at least some compensation amounts that don’t involve raising huge sums in uncertain international markets – and at least getting the process started. As discussed below, revenue raised from land taxation, leveraged funds through bankable leases, joint venture arrangements, land swaps and donor investment in public goods could all contribute to elements of the compensation – perhaps quite a lot. A fund that held such revenues – a simpler mechanism than a frequently-touted land bank – could in turn be the vehicle for both paying compensation and also investing in agricultural recovery. Overall, if some progress is made, signalling a willingness to continue the process in good faith, there will be possibilities for further dialogue and new international market financing options down the line. There has to be a way out of the impasse, but it requires all parties to engage, and it will take time, but it’s the direction of movement that’s critical. The South Africans and the wider SADC community of nations can help with this, as can wider friends and allies of Zimbabwe, including the Chinese together with Western nations.

The compensation is only for improvements, what about the land? The painstaking calculation of the value of fixed improvements on farms taken over by land reform came to an agreed figure of US$ 3.5 billion. It is imprecise but it is important, as for the first time an agreement between the parties was reached. Paying it all in full and within expected timeframes will almost certainly be impossible. But the important thing is to show that the Zimbabwean government is serious and payments for improvements flow faster than before. But some argue that this is not enough and another equivalent amount will be needed to pay for the land. This runs against the cross-party agreement in the 2013 Constitution, approved in a national referendum, where compensation for land is only offered to land held under investment treaties (BIPPA farms) and, reflecting a deeply-problematic racial bias in the provision, ‘indigenous Zimbabweans’. While the Constitution points to the former colonial power as the potential payer of compensation for most land acquired during the land reform, no one – neither the Zimbabwean state nor the British – expect this to be realised. This was formulaic political positioning, seen as rhetoric rather than any real expectation. Yet some, referring to various court rulings, still think this is a possibility, and the lobbying of the UK government on this continues. To my mind, this is an unfortunate diversion, and is a route to the sabotage of the carefully agreed Constitutionally-aligned deal. Continuing to debate wider compensation for land gives credence to a view that has since been abandoned by the pragmatists. US$ 3.5 billion is a lot of money, and paying it would be a signal that this phase of Zimbabwe’s history is over.   

How can donor financing of compensation be focused on public goods in A1 areas? In the absence of a wider deal with full financing at least for now, how could some steps towards addressing compensation be initiated? As discussed before on this blog, breaking down the payments into different elements is the first step. Disaggregation between A1 and A2 areas is crucial. Within each area further disaggregation is required between payments for items that have become public goods (farmhouses that are now schools or clinics for example, or dams irrigation systems that are now jointly used by multiple smallholders) and those that remain private. The public good elements could be part of a major public, donor-supported investment in infrastructure development, including rehabilitation of such assets. Mostly in the A1 areas, these could be part of an aid programme supported by donors and international finance institutions as part of a commitment to rehabilitating the productive economy and addressing poverty and food insecurity. This may end up being a quite large proportion of the funding. With compensation payments being made – yes incrementally over years – the designation of fast-track resettlements as ‘contested areas’ would be removed, and donor support for basic development and humanitarian aid in a the fast-track resettlements could commence. This would address long-standing issues of development, including schooling and health that have been denied to residents for 20 years due to international agencies’ ‘restrictive measures’.

What about private financing of compensation payments for improvements in A2 areas? Private payments towards farm improvements is in my view a perfectly legitimate expectation of A2 farmers who have acquired larger farms and inherited improvements, including houses, fixed equipment, dams, roads and so on. Now surely is the time to establish a system of land taxation, appropriate to the natural region and the expectations of production from a particular farm. This would contribute in part to paying off compensation owings over the coming 30 years or so and would also providing ongoing financing for the necessary land administration system – of audit, land registration/lease issuing and so on – that must accompany any formalisation of compensation and shifts in legal ownership. A taxation system would also provide incentives to invest in A2 farms, some of which have lain idle, while also flushing out those who are holding land simply for speculation. It will not be popular, and some of course will find ways of not paying it, but partial private financing of compensation and agricultural recovery will offer an important message for wider financing.

What about former farm workers? This is an important question, but the Constitutional arrangements that the deed addresses deal only with compensation for land improvements. A separate arrangement is needed to ensure that former farm workers get a fair deal after the land reform. There were around 300,000 workers working on commercial farms at land reform. However, it’s important to get the numbers right. Only half of these were permanent workers, and so on salaried arrangements with accommodation and/or other benefits; the rest were temporary workers moving to and from their own homes and so outside legal obligations for compensation for being laid off. The 150,000 odd permanent workers were supposed to have been paid salaries owed and some form or redundancy payment when farms were taken over. Ensuring that this was paid by the former farm owners should certainly be a condition of any payment of compensation. Any owings due could be removed from the payment and distributed to listed workers. The approximately 40,000 former workers who were displaced in situ are perhaps the most vulnerable group of those workers who lost out due to land reform. A focused development effort is required to support their livelihoods, including land allocation, improving accommodation conditions and assuring worker rights in the new land reform farms. While essential, this wider development challenge is another issue, separate from the compensation arrangements, but must follow on from it as a key aspect of post land reform development efforts by government and development partners.  

If donors invest in land reform areas won’t this all go to party cronies and the military? This is a line that I have heard from some, reflecting the (still) poor understanding of land reform distribution. Noone denies that patronage has been important in allocating land, and continues to be so under the new dispensation as political scores are settled through reallocating land. However, this is concentrated almost exclusively in the A2 areas, where public investment in paying for infrastructure as improvements would not be focused (see above). A1 areas were occupied largely by poor and marginalised people from communal areas and the unemployed from towns. Yes there were war veterans involved, but many of them were poor communal farmers too, and had been for 20 years. Of course after the invasions the ruling party has made use of its capital, sometimes by force, in the new resettlement areas to exert its power. But this doesn’t mean that all A1 farmers are party followers; they may ‘perform ZANU-PF’ in order to get by, but many are extremely critical of the lack of state commitment to post land reform support and are very critical of the party-state. And even within the A2 areas, not everyone is a ‘crony’ as is sometimes suggested. Far from it. Depending on which part of the country, the proportion is limited, perhaps 20 percent at the most. For this reason targeting public aid investments can maintain the position of ‘restrictive measures’ (aka sanctions), avoiding direct support to party officials and the military, and so not contradicting the demand for political reform and the tackling of corruption and party-military patronage.

Isn’t all this a gambit by ZANU-PF to gain credibility? Yes of course it is, but it also represents a commitment to at least one part of the Constitution, agreed across all parties, and a commitment to reengagement. As a move by the technocrats within the party, led by Mthuli Ncube and others in the Finance Ministry, it’s a last ditch attempt as the economy sinks even further following the pandemic to gain recognition and pursue dialogue with international partners, particularly in the West. The opposition have rejected the move as they want wider regime change and the Western diplomatic community as ever are hedging. It’s a difficult call, but given that the compensation issue – largely raised as a key condition by Western governments under lobbying pressure from white former farmers – has held up economic development for 20 years, rejecting it now seems self-defeating. Caution is required, but failing to grasp an opportunity now opens up more dangers of an extended impasse, deepening poverty and the likelihood of more regressive forces making their move in Zimbabwe’s factional politics.

Won’t the compensation deal open up the opportunity for land grabbing and speculative investment? With compensation paid and land transferred formally and no longer ‘contested’, this does open up new opportunities. While there are dangers of unscrupulous investors, land grabbing by elites and land speculation emerging, these are all issues that an effective land administration system can deal with. Land is still held by the state so a free-for-all land market can be avoided, while checks and balances should emerge through an effective land audit, cadastral survey, land registration (through permits and leases with conditions) and a land taxation system. Zimbabwe is far away from this now, which is why I have long argued for compensation to be seen as one part of wider land administration system, which could be tested then rolled out on a district-by-district basis. Dangers accepted, there are also positive opportunities that emerge from the releasing the impasse of ‘contested areas’. With clarity of ownership and use, leases and permits can then become vehicles for raising funds through the banking system and other investors will be more interested in joint ventures and contract farming arrangements of different sorts, with much-needed capital investment following. This may allow opportunities for former white farmers to rejoin the farming community on a new basis, but now with security and clarity. Equally, external investors – whether from China, Germany or Britain – may at last see investment in Zimbabwean agriculture, across the value chain, as a viable option, providing impetus to the rehabilitation especially of A2 farms. There are two sides to any coin and with the right safeguards, with a substantial investment in land administration – another area where external donor funding and expertise can pay dividends for wider development – the prospects for investment and growth could be substantially enhanced.

Where next? The need for a pragmatic politics

There is a lot of technical work ahead to make the compensation arrangement work, whether around systems of international financing or debt restructuring or around the mechanisms of payment by farmers for private goods and by donors and the government for public goods. It requires some painstaking work assessing different farms and defining the pattern of payment required, as well as setting up funding mechanisms to make it happen. If land taxation and payment of dues to workers are to be conditions respectively for A2 farmers and for ex-commercial farmers, this will require some hard bargaining, as well as some robust systems for checking compliance. But all this is possible: if there is a will, there is a way.

For starters, there are some clear low-risk opportunities for international partners to engage with – around paying for improvements through an infrastructure rehabilitation programme in the A1 areas; through setting up a functioning land taxation system or through establishing an effective land administration system to allow investment to flow. These are all good bets, technically-focused and uncontroversial, yet important for much-needed development. With such public and aid commitments, then other private investments will be encouraged, either through taxation systems or through external investment into the sector.

With the opposition crying foul, the Western donors and diplomats prevaricating, some white ex-farmers remaining vocal critics and demanding compensation for land too and the more radical elements in the ruling party and beyond suggesting that this is selling out to the colonisers, gaining a political consensus around this is going to be hard. It will require some hard-nosed pragmatic politics, focused on rebuilding the economy and constructing a platform for on-going dialogue and reform. If this breaks the 20 year impasse on land and the economy this could still be a major breakthrough for development, one that could improve the lot of all Zimbabweans now and for the longer term.

This post was written by Ian Scoones and first appeared on Zimbabweland.

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Zimbabwe urgently needs a new land administration system

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REUTERS/Siphiwe Sibeko

This is the second in a short series of articles produced for The Conversation on the land and agricultural development challenges for the post-Mugabe era. See the first one on compensation in last week’s post.

Zimbabwe urgently needs a new system of land administration to harness development in the agricultural sector. The country’s land use and ownership have been significantly reconfigured by the fast-track land reform programme undertaken during Robert Mugabe’s rule.

Today, following the land reform of the 2000s, Zimbabwe has an agrarian structure that’s made up of small, medium and large farms, all under different forms of land ownership. A landscape that used to be dominated by 4,500 large-scale commercial farmers is now populated by about 145,000 smallholder households, occupying 4.1 million hectares, and around 23,000 medium-scale farmers on 3.5 million hectares.

Knowing exactly who has land and where is difficult. Illegal multiple allocations combine with unclear boundary demarcations and an incomplete recording system. Many new land owners don’t have formal documentation and lack leases or permits confirming ownership. There is a great deal of uncertainty given the often haphazard, sometimes corrupt, approach to land reallocation that took place under the land reform programme.

Given that the landscape is very different to what went before, a new system of land administration is urgently needed.

Promise of change

In his inaugural speech, Zimbabwe’s new president, Emmerson Mnangagwa, declared that land reform was both necessary and irreversible, and acknowledged some big, outstanding challenges.

A new land administration system for the post-land reform era is long overdue. Paying compensation to former owners is a vital first step. This has to be combined with a comprehensive land audit to weed out those failing to produce, or those illegally holding more than one plot, alongside allocating leases and permits to those in land reform areas, and attracting investment into agriculture as the mainstay of an ailing economy.

Both compensation and audit processes will inevitably throw up disputes. A fair and transparent system for rapid resolution is required, including the establishment of an independent Land Tribunal. Alternative dispute resolution processes at a local level will hopefully avoid the dangers of the courts getting clogged with numerous cases.

An audit also has to be linked to land registration, and an effective, but low-cost, land information management system. Following registration, legal recognition and formal documentation of land ownership is essential, as land tenure security is vital for future investment.

Many forms of tenure

Some believe that the only solution is individual freehold titling, as land is otherwise seen as “dead capital”. But this is mistaken, as other forms of land tenure can offer security, spurring investment, if the institutional, legal and political context is right.

As argued in 1994 by the Rukuni Commission, a major review of tenure policy in Zimbabwe, a multi-form tenure arrangement makes most sense. In some settings, communal tenure regimes are best, allowing flexibility and broad access. In others, a simple permit system can allow registration. In others, a leasehold arrangement can offer security and collateral, while regulations can offset land concentration and assure access for certain people.

Occasionally freehold title may be appropriate if a completely free market in land is required. However, titling schemes are notoriously expensive to deliver, open up multiple disputes and are difficult to regulate to ensure more equitable ownership structures, including land ownership by women.

Financing is essential

To pay land taxes, mortgages or compensation payments, the land must be productive, and this requires finance. Finance for agriculture has been missing in recent years.

Great efforts have been made to ensure that the 99-year lease for medium-scale commercial farm land (known as A2) is bankable, and cannot be withdrawn arbitrarily. It seems that, at last, the Zimbabwe Banking Association is in agreement. This will allow the release of private bank finance, as land can be used as collateral.

For those without land leases, other types of collateral can also be used, including assets such as livestock, vehicles or buildings. Alternative sources of farm finance include commercial crop contracting, partnerships and joint ventures or government backed loans.

All these financing models have shown some promise in Zimbabwe in recent years, with crop contracting at the core of the smallholder tobacco production success story. Contracting arrangements are also extending to other crops. Joint ventures, including partnerships with Chinese investors and former commercial farmers, have also been emerging in a number of under-capitalised medium-scale farms.

“Command agriculture” – a public-private input supply scheme – has been a flagship project led by the new president and the military. It has helped to revitalise maize and wheat production, especially on larger farms with irrigation infrastructure. Questions are however raised about longer-term sustainability of such subsidised financing.​

Sustainability is key

Getting a new land administration system working is a huge task. All the elements have to work together – from audit to valuation to compensation to dispute resolution to issuing land tenure documentation to financing – and back again.

And this is not just a one-off task to resolve the current mess. Land disputes will continue, audits will need to be repeated, and new leases and permits and sources of finance secured. For this reason any new system must be sustainable, both administratively and financially, and not reliant on external donor finance. Taxes, rents and compensation repayments need to be paid back into a land fund, which in turn supports the system for the long-term.

Testing this all out at a district level before rapidly rolling it out across the country is an urgent task for Zimbabwe’s new Land Commission. Elaborating a new land administration system is long overdue. Such a system will help the country get over the post-land reform impasse, resolving outstanding land issues and getting much-needed investment flowing into the agriculture sector.

The ConversationOnly with this working well – as countries in East Asia recognised when they undertook land reforms decades ago – will the full benefits of Zimbabwe’s land reform be realised.

Ian Scoones, Professorial Fellow, Institute of Development Studies, University of Sussex

This article was originally published on The Conversation. Read the original article.

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