Land compensation: Another illusion from ZANU-PF
FORMER finance minister Tendai Biti’s People’s Democratic Party (PDP) has a way of getting people’s feelings wounded by the tragedy of the country’s dire economic circumstances. In a statement last week, the party said ZANU-PF’s “attempt to create an illusion of reform” was in fact “a necessity pushed by the worsening financial woes which is facing this regime”.
In other words, Zimbabweans were being led down the garden path: ZANU-PF and its government were not committed to reforms and, in PDP’s words, government is “indicating right yet turning left”.
The remarks by PDP came after Cabinet took the decision to close all foreign-owned companies that fail to comply with the controversial Indigenisation and Economic Empowerment Act by tomorrow.
Yet a few days before that decision, an International Monetary Fund (IMF) mission had given the country the kudos, highlighting that government had “met all quantitative targets and structural benchmarks under the third and final review of the SMP (Staff Monitored Programme)”.
“Moreover, they have started to develop a medium term economic transformation programme, in line with the broader reform agenda presented at the Lima meetings on arrears clearance in October 2015,” said the IMF.
In terms of that plan, Zimbabwe had highlighted that improvement of the business environment was critical.
The IMF noted: “In particular, the consistent and transparent implementation of the indigenisation policy will be critical to attract both foreign and domestic investment by limiting the scope for discretion.”
Indigenisation is one of two issues ZANU-PF holds so dear as part of President Robert Mugabe’s legacy. The other one is the land redistribution programme his government embarked on in 2000.
Despite being good initiatives, both have resulted in the country’s economic ruin and international isolation.
In just two-and-a-half years from June 2000, government had expropriated between nine and 11 million hectares from white farmers in a swift and ruthless exercise that left a few dead.
Much later, the programme dispossessed at least 4 000 white farmers. Only 300 are said to have survived the expropriation.
The result of the programme, which government admits was marred by widespread corruption, was the collapse of the agricultural sector, and consequently the economy, which experienced terrible commodity shortages, hyperinflation and the erosion of the domestic currency.
The country had to ditch the local unit in 2009 and adopt a hard currency regime dominated by the greenback to stabilise the economy.
Still, it remains frail. The manufacturing sector, still largely agro-based, has collapsed, and many companies continue to close. Millions of unemployed graduates roam the streets, and many more have fled to regional countries and abroad.
With no recourse to the money printing machine, Zimbabwe has witnessed post-dollarisation economic degeneration, with dwindling stock of currency in circulation, largely due to an overdependence on imports to curtail shortages.
Exports have been ruined by the collapse of local industries.
Due to arrears with international donors, the country has been unable to access offshore funding, further undermining government’s ability to turn around the country’s fortunes.
The debt arrears clearance plan is therefore meant to resolve the crisis, and donors have indicated that it should include a clear policy to compensate white farmers for expropriated land, as well as clarity on the indigenisation policy.
But critics say what has now ensued from a government trying to placate the international community is well-crafted deception that includes the land compensation plan.
The IMF, in its report after the mission’s visit, highlighted that compensation of former white farmers was integral to Zimbabwe’s prosperity and re-integration into the international community.
“The bankable land leases which the authorities are finalising will help to boost productivity and access to financing in agriculture,” a buoyant IMF mission said about the planned compensation programme in a statement at the conclusion of its visit.
Yet it may indeed just be another fantasy: President Mugabe has insisted that his government will not compensate dispossessed white farmers and that this remained the responsibility of Britain, Zimbabwe’s former coloniser.
Finance Minister Patrick Chinamasa has unveiled the memorandum meant to facilitate the compensation of displaced, white farmers for land expropriated under the land reform programme during the IMF mission’s visit to Harare. The memorandum was tabled before Parliament on March 16.
Domenico Fanizza, who led the IMF mission, said the idea of a land compensation fund was noble.
“I will be happy if your creditors know about it and it will change things for you,” said Fanizza.
But would government afford it? Certainly not, but Fanizza remarked: “It’s not a question of government not affording it. Creditors are not after the money, but the principle.”
But it has to be a principle with basis.
There are indications Chinamasa does not have buy-in from President Mugabe’s Cabinet; Lands Minister, Douglas Mombeshora, expressed ignorance on the existence of Chinamasa’s compensation plan when it was first sent to Parliamentarians through their pigeon holes.
Mombeshora said he did “not know about the document”.
“I do not deal with compensation; we ju-st give the Ministry of Finance the figures and the farms that need compensation,” Mombeshora had stu-bbornly remarked.
Yet this has precisely been the problem with President Mugabe’s government, whose ministers have shown clear policy discord in public.
Before a document is unveiled as government policy, it should first have Cabinet approval. The fact that Mombeshora was unaware of its existence may highlight lack of cohesion on the compensation plan, and may inevitably lead to its failure.
The idea is not necessarily about the nobility of the plan; it is about the success of its implementation.
For example, while the objective of Zimbabwe’s land reform was noble as it was meant to benefit poor black farmers crammed on infertile, rural land, the programme was instead mired in nepotism, corruption and poorly implemented.
Vince Musewe, the PDP secretary for finance and economic affairs, said while they welcomed the creation of the compensation fund, they had misgivings over its implementation, saying “we are most likely to end up with another ZANU-PF slush fund that can be abused”.
Musewe said: “The People’s Democratic Party welcomes the proposed establishment of the Land Compensation Fund which seeks to attract resources for the compensation of commercial farmers whose properties were repossessed during the disastrous ZANU-PF fast track land reform project of 2000. According to the Land Compensation Fund’s memorandum, tabled in Parliament, the main objective of the fund is compensation and the second objective of the fund is to enhance agricultural productivity on allocated land.
“In our economic policy document Holistic Programme for Economic Transformation we have identified agriculture as one of the key enablers for economic recovery, not only to achieve food security, but to create jobs and sustainable incomes for our rural population so that they can have a better quality life.
“There is no question that agricultural recovery will also have a knock-on effect on the rest of the economy. It will directly lead to the revival of our food processing industry which historically relied on 60 percent of its inputs from the agricultural sector and employed millions. Historically in Zimbabwe, one dollar invested in the agriculture sector resulted in four dollars being invested in related industries and that is still the case and then some.
“The conflict on land ownership therefore needs to be resolved first in order for us to re-establish the value of our land assets and attract more investment in the economy as a whole.”
Musewe added that there were about 4 500 commercial farming businesses with about 5 300 properties whose ownership remains disputed and 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,” he said.
That estimate appears to agree with figures previously reported by the Financial Gazette, which wrote in 2012 that displaced white farmers had presented government with a staggering US$10 billion bill for property confiscated during the country’s chaotic land redistribution exercise.
Opposition Movement for Democratic Change (MDC-T) Parliamentarian, Eddie Cross, said compensation for expropriated farms would be higher than US$10 billion.
He said when the farm invasions started in 2000, the Commercial Farmers Union instituted a computer based registry of all farms taken over and recorded assets and other inventory on the farms.
This registry, he said, is currently being managed by a consortium of valuation companies called the Valuation Consortium or Valcon.
“Today about 90 percent of all the farms taken over by the State are listed on this registry which includes a complete record of the actual takeover, the farm boundaries and all improvements as well as any other assets taken over. Satellite images exist of every property over the whole period to monitor what has happened since take over. The purpose of this registry is to provide support for individual claims for compensation,” he said.
Cross said the State had always accepted that it had to pay compensation to the former owners for title deeds.
“The only question was how much and on what basis and when. Since 2000, the legal rights of the farm owners have been examined and tested in courts of law all over the world and in the region. In every case, the right of the farmers to compensation has been upheld and in several key instances actual compensation claims have been legally quantified and valued.”
Cross said about three percent of the land owners affected or about 200 individual farm owners had accepted compensation offered by the State and relinquished their rights to any further claims.
“The compensation paid in these instances amounted to about 10 percent of the value of the properties. The remaining land owners have not accepted compensation on this basis and this is the issue that is now confronting the Zimbabwe government,” he said.
“If we isolate the claims of the 4 800 farmers who have had their farms taken from them, the claims cover roughly seven million hectares and the estimated discounted, replacement value of those properties in terms of (land and immovable property and improvements) is US$11,4 billion,” Cross said.
He said US$8,6 billion would be for immovable assets while US$2,8 billion would be for land at current values.
“If we use the basis of claims set by legal precedent in Europe and South Africa, then the total theoretical claim rises to double this figure or more and includes elements such as damages, lost income and interest from the date of acquisition,” Cross noted.
Surely, this would be beyond the means of government.
In terms of the plan spelt out in the document explaining the creation of the land compensation fund, farmers resettled on seized land will be asked to pay rentals and leases to be determined by the size of their farms.
These would go towards the compensation fund for evicted white farmers.
Said Cross: “Clearly there is simply no capacity in Zimbabwe to settle this matter either now or in the near future. The land is occupied by 150 000 small-scale farmers (A1 settlers) and 18 000 large scale farmers or A2 settlers. None of these has any form of secure title and there is no market for agricultural land in Zimbabwe at the moment.”
Author and displaced white farmer, Cathy Buckle, has clearly no faith in the government proposal.
She said in an article on her blog: “The new Land Compensation Fund all sounds very grand, but wait; look a bit closer. We are a country that is completely broke and has just declared a national disaster, appealing to the world for one and a half billion US dollars of emergency food aid and other assistance. For the last fifteen years the 200 000 plus beneficiaries of seized land have turned us into a food insecure country, leaving us net importers of 80 percent of our food.
“These same 200 000-plus people aren’t even able to provide their own seed and fertiliser to grow their crops, continually needing inputs from the government. How then will these same people be able to pay the rents and leases which are apparently to provide the income stream into the Land Compensation Fund?” she asked, rhetorically.
Indeed the resettled farmers have indicated that they do not have the capacity to fund Chinamasa’s plan.
Zimbabwe Commercial Farmers Union president, Abdul Nyathi, told news agency, Reuters, that his members would not be able to pay compensation.
“Most of the farmers face viability issues. The government will have to look at other ways of raising money,” he said.
Victor Matemadanda, secretary-general of the Zimbabwe National Liberation War Veterans Association, also told the news agency: “Are farmers able to pay? I will say no. Is the land being productive? I will say no again.”
He said many resettled farmers could not even meet water and electricity bills. He said it was government’s obligation to pay the compensation.
Parliament has not yet debated Chinamasa’s plan, but among its members are beneficiaries of the land reform programme who may not want government to burden them with the responsibility of raise cash for compensation of the evicted white farmers.
Chinamasa, himself a beneficiary of the land reform programme, may then be forced to look elsewhere, but so far there are no meaningful alternatives.
Will this then mean giving the dispossessed white farmers back their land?
Nobody in ZANU-PF would want to risk making that suggestion to President Mugabe.
“We say no to whites owning our land and they should go. They can own companies and apartments in our towns and cities, but not the soil. It is ours and that message should ring loud and clear in Britain and the United States,” President Mugabe said just over a year ago.
It’s a statement that still reverberates in government’s economic policies, except the indigenisation campaign suggests they can’t still own companies and control them.
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